Risk rally losing steam

The rally in risk assets is losing its momentum, with US stock markets failing to extend gains following a four day rally while US Treasury yields continued their ascent in the wake of Fed Chairman Yellen’s testimony highlighting no deviation from tapering. Her testimony to the Senate will be delayed today while US data in the form of retail sales is likely to register a soft outcome. Sentiment was boosted overnight by strong Chinese trade data in January and the approval by the US Congress allowing a suspension of the debt limit, a far cry from the major saga that took place last time the debt ceiling was about to be breached.

Additionally Eurozone markets will find some support from comments by European Central Bank board member Coeure who noted that the central banks is “very seriously” considering negative deposit rates. His view may be supported by the release of the ECB monthly bulletin today and Survey of Professional Forecasters (SPF). Coeure’s comments undermined the EUR however, while in contrast sharp upward revisions to growth forecasts by the Bank of England in its Quarterly Inflation Report boosted GBP. Suffice to say, EUR/GBP dropped like a stone and looks set to remain under downward pressure.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: