The risk trade was back on yesterday but the bigger question is how long will that trade work. The dollar fell and commodities were mostly higher as the FTSE gained 2% and the Dow climbed to its highest level in more than a year.
Treasuries were a mixed picture, with buyers pushing yields in the long end lower. Gold continued to shine, closing at a new high of $1164.30, an increase of 1.6%, but oil was just barely higher at $77.56 per barrel.
German IFO data released today will be of focus for the markets. In the U.S, Fed minutes are being watched carefully both for an economic update and any inkling of what Fed policy makers are thinking about what could trigger a move in rates. The Fed’s last statement signalled the market that there are no changes coming from the Fed any time soon, which is conducive to the risk rally. Economists expect to see GDP revised to show growth of 2.8%, down from the initial reading of 3.5%.
The UK market and the European markets have opened down around 0.5%. U.S futures markets are pointing to a slightly negative start when their markets open this afternoon.
© Brooks Macdonald Asset Management 2009
Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.
Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.
