Weekly Market Commentary
How do you sum up a week of pandemonium in markets? The trigger was a strong jobs reports in the US which raised fears of inflation and spiked US Bond yields. This lead to a big sell-off in equities to close last week. The new week continued the massive volatility with massive sell-offs and rebounds on the share markets. The Bank of England was bullish on monetary policy, which translated to another spike in Bond yields, accompanied by a sell-off in equities. This has turned in to a technical correction (10%) in a healthy economic environment. The extreme volatility has been exaggerated by the electronic and algorithm trading triggering stop losses and massive short positions. The technology and nature of the markets would need some adjustment to prevent these massive events. The Dollar has regained some ground, supported by the rise in bond yields, translating in to lower commodity prices. The EUR fell to 1.2230, while the Yen trades 108.50, reflecting the reserve rally. Commodity currencies suffered directly from the associated slide in prices but were impacted by Central Bank rhetoric. The RBA and RBNZ have both committed to extremely loose monetary policy for the foreseeable future, undermining the currencies, in a different space to the US and UK. The AUD fell below 0.7800, while the NZD drifts lower, towards 0.7200. This coming week has a plethora of global economic data and strong numbers may continue to challenge bond yields, thus equity markets and currencies.
Weekly Market Calendar
12/2 NZ Home Sales, NZ Credit Card Spending, US Budget, Australia Consumer Confidence
13/2 UK CPI, UK House Prices, NFIB Small Business Optimism
14/2 NZ Food Prices, Australia Consumer Confidence, Japan GDP, RBNZ Inflation Statement, German GDP, German CPI, Italy GDP, EU Industrial Production, EU GDP, US Weekly Mortgage Applications, US CPI, US Retail Sales
15/2 Australia Inflation Report, Australia Employment data, Japan Industrial Production, EU Trade, Empire State Manufacturing, US Weekly Jobless Claims, Philly Fed Survey, US Industrial/Manufacturing Production, NAHB House Market Index
16/2 NZ Manufacturing PMI, US Home Sales, US Exports/Imports, US Building Permits, University of Michigan Sentiment