Metals, Oils, Indices, Bonds, Equities

15 May, 2017

Keep up to date with metals, oils, indices, bonds, equities and agricultural commodities in our Beyond Forex analysis. With a lot of news coming out of the United States and the UK, there have been some observable trends developing; some more beneficial than others. Also visit our economic calendar to learn about this week’s latest and most significant economic events.

Treasuries

After last weeks’ damning assessment by BoE Governor Mark Carney that consumer spending in the UK is now set to slow after that unexpected boost in the wake of the Brexit referendum vote, Thursday’s UK retail sales print for April will be under close scrutiny. The bank has got this assessment wrong before with the downbeat view in the immediate wake of last summer’s vote being incorrect, so anything that suggests spending will continue and inflationary pressures will need managing should lend support to UK gilts with yields rising accordingly.

Gold

Political uncertainty in the US with the firing of the FBI chief James Coney is serving to buoy the price of gold, keeping the precious metal comfortably above the $1200/oz level. Although we have no scheduled events that could provide further direction in this field, if there is more to suggest that the dismissal was made in a bid to cover up a wider issue, then we can expect safe haven assets to see significant inflows as a result.

Indices

Equity valuations globally continue to march higher, seemingly willing to defy everything the textbooks have taught us. At some point there’s going to be a reversion and the old adage of ‘sell in May and go away’ could well come back to haunt the market this year. The theory dates back hundreds of years to a time when trading was far more sedate and certainly business in London stopped for the whole summer, so it doesn’t reflect modern markets where we’re trading 24x5 and much of it is algo-driven. However the data does show a pattern, so the combination of toppy valuations, political risk and the summer effect could combine to act as a warning flag on markets like the DOW.

Oil

Optimism over the idea that Opec will be able to extend production quota limits at their end of month meeting in Vienna has helped lift crude prices a little, along with those falling inventories in the US, but the market is already flagging. It’s worth noting however that we do have a relatively stable geopolitical situation across the Middle East at present so this will be keeping a lid on prices. The Opec summit on May 25th – and any announcement about Russian production cuts immediately before that – will remain the big scheduled event to watch for.

Equities

Shares in Boeing took a tumble last week as the aircraft manufacturer announced it was suspending test flights of its new 737 MAX passenger jet. However the company remains adamant that it will meet the target date for delivering the first of these planes to its customers, but the clock is ticking. The  deadline is at the end of this month and any delay would be both embarrassing and costly in terms of the financial penalties which would have to be paid. This is certainly a stock to watch this week.

Softs

Coffee prices have been squeezed of late, although the International Coffee Organization is saying this has nothing to do with oversupply and is more about speculators in the market. This is one to watch as the cycling out of coffee crop by Brazilian farmers could impact volumes, with harvesting starting right about now. This is a timely reminder how speculative trades can divorce price action from the underlying market, but if we see reports of low yields coming on top of already low prices, the next move could be a significant leg higher.


Source link  
Yellen's Testimony, BoC Interest Rate Hike, Big Bank Reports

Hawkish or Dovish, well today we have retrospective examples of its effect on the sentiment for a currency. In one case Yellen’s indication that national debt should be capped and that monetary policy should be gradual...

Gold Dropped as Forecasted

This is a notable day for several interrelated moves: the fall of the yen, the rise of the dollar, and the drop in precious metals. All these changes resulted ...

Deutsche Bank Derivative Loss

Although markets seemed to calm after last week’s activity, this doesn’t mean that the newsrooms are quiet. One of the big topics – is Deutsche Bank’s big derivative loss estimated at $60 million due to a risky bet placed on U.S. Inflation. According to Bloomberg.com...


Italy Commits 17 Billion Euros to Keep Veneto Banks Afloat

Italy arranged for one of the biggest bank rescues in history, with a cost of up to 17 billion euros ($19 billion) in order to wind up two failed banks in one of Italy's wealthiest regions. However, the deal- which was approved by the European Commission...

Oil in Bear Market

Yesterday we saw a continuation in the drop of oil prices, which rippled out into the markets – pulling down both US and European Stock with it. This is likely a result of fears due to the non-OPEC countries ramping up production to cover the gap left from the OPEC+ agreement to restrict production...

Brexit Update - The EU Wins Round 1

Although not an outright conflict, the discussions surrounding the Brexit talks have been at best contentious and at worse...


Economic Calendar: BoJ, ECB, US Housing

The previous week's economic calendar had the potential to destabilize some of the world's most traded currencies...

Is the USD Going Up After its Recent Drip?

The US dollar is showing signs of recovery against other major currencies, sans the GBP. After the Bank of England Meeting Minutes announced an increase of interest rates, GBP/USD prices saw a significant upswing. This resulted in GBP climbing from 1.2696 to roughly 1.2755...

US dollar saw a rapid drop

The US dollar saw a rapid drop of its price opposite other major currencies after the announcement of the less than positive and expected statistics regarding U.S. inflation and retail sales. Retail sales dipped significantly to 0.3% in May down from the 0.4% rate of the previous month...

  


Share it on:   or