The Marketplace - 22nd June 2016
Fed Chair Yellen testifies again on monetary policy today, this time to the House. She is likely to repeat comments she made yesterday in the Senate. Ms Yellen noted “considerable uncertainty” about the economic outlook, especially in light of the weak payrolls figures for May and that the FOMC will proceed cautiously with policy tightening.
Financial markets seem unconvinced by the Fed’s latest median ‘dot plot’ showing officials expecting (or hoping) to raise interest rates twice this year. Admittedly, a greater number than before on the FOMC now anticipate only one hike. Markets are currently pricing just below evens probability of at least one rate hike and less than 10% probability of at least two hikes.
Elsewhere, US existing home sales and the preliminary estimate of Eurozone consumer confidence are likely to garner limited attention. Banks in the Eurozone will submit bids for four-year loans in the first round of the ECB’s new TLTRO-II programme, with results expected on Friday.
The Marketplace - 21st June 2016
Over yesterday’s trading session Sterling benefited from a surge in the markets as headlines and polls dictated the currency’s movements. As with most things politics, it’s highly likely that the outcome from a specific poll is correlated to the political stance of that organisation of newspaper (who are often the ones commissioning the poll)
Both share prices and Sterling rallies have continued after the weekend polls were announced, with the FTSE posting its largest one-day rise since February. However, the rise wasn’t contained to the UK, both the Dax and the CAC witnessed gains off the back of this serge following indications the EU will remain intact after Thursday’s referendum.
The Marketplace - 20th June 2016
Financial markets are braced for one of the most volatile weeks of trading since the height of the 2008 crisis, as campaigning continues following its suspension in the wake of the MP Jo Cox killing.
On a standalone basis, one week volatility, the measure of how much a currency is set to move over the following week, is running at its highest in recorded history, over twice the levels witnessed during the Scottish referendum or last year’s election. With the fallout unlikely to be limited to the British Isles, global markets are also ‘on alert’ as surveys conducted last week indicate that global equity holdings have dropped off over last week, concurrently, weekly outflow from UK equities hit GBP769 M, it’s second largest in a decade, with investors heading for Bonds and Precious metals.
Sterling is expected to suffer unprecedented daily swings in the run up to Thursday’s referendum.