Europe: In a period of continued weakness and pervasive uncertainty
Those words are Mario Draghi’s who as Governor of the European Central Bank is well qualified to use them. European interest rates will not rise before 2020 and a cheap funding scheme for banks will be re-launched aimed specifically at Spanish and Italian banks. Apart from the obvious which is that Spanish and Italian banks are most in need of assistance, the reason for this is the degree of exposure to those banks by the rest of the Eurozone’s banks: expect the words Contagion Risk to become a regular feature in the next 6 months. European growth has been forecasted down to 1.6% for 2020 and 1.1% for 2019. Both look optimistic. EUR has weakened considerably as have European stock markets last week.
Weaker US employment data gave markets pause for thought at the end of last week. However the Dow closed only slightly lower at 25,450 and EUR/USD was also unchanged from the previous close. In the UK with further political uncertainty and Conservatives threatening to turn more against each other, GBP continues to slip against both USD and EUR. Gold slipped to $1299. Oil steady at $56. This is a big week for UK plc and markets are alert to each and every piece of news on Brexit developments.
Buckle up!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Dollar Reserves With the passing of Trump’s original deadline for the reimposition of liberation day tariffs yesterday, markets have breathed a sigh of relief. July VIX futures continued to slide lower. Moreover, what may surprise anyone who had been expecting the issue of tariffs to resurface following the passing of Trump’s new deadline, so too […]
Weren’t Tariffs USD Negative? The Dollar proved sensitive to headlines regarding trade during the US overnight session. However, contrary to what many commentaries would have you believe, as the risk of tariffs escalated the Dollar rose. The 90-day pause following Trump’s April ‘liberation day’ tariffs had been set to expire this coming Wednesday. To the […]
Big Girls Don’t Cry A bond market tantrum and one of the sharpest one day sell offs in Sterling for several years appear to have been catalysed by the Chancellor’s appearance in PMQs yesterday. First: the back story. This Labour government has faced some embarrassment in recent weeks trying to get its welfare bill through […]