Morning Commentary: A Little Something for Everyone
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
A Little Something for Everyone
Share this story:
Alan Rose Foreign Exchange Head Trader
While there is really not much movement in the markets from overnight, there are a few noteworthy exceptions as we approach the Fed interest rate decision day tomorrow and month end factors. European currencies remain better bid against Asian currencies as the market is still digesting the short, medium and long term impact of a prolonged U.S –China trade war. Oil prices continue to move higher for the short term pushing back into territory not seen since 2014.
One of the most important triggers for the market is the steady but persistent rise in U.S. interest rates. U.S. short, medium and long term interest rates have been rising steadily almost exactly from one month ago. So far, the rise in rates has not derailed the global equity markets nor has it caused the USD to take flight. This morning, U.S. 10-year yields are near 3.10%; the last time we saw these levels was in May and before that in 2014.
So far, markets seem to be absorbing the twin shocks of rising U.S. interest rates and a long drawn out trade war between the U.S. and China. Markets appear to have priced in enough negative news on both of those fronts for now. Markets are fully expecting the Fed to raise interest rates for the eighth time tomorrow; the key for the markets will be the forward guidance provided by the Fed regarding expected future growth and inflation. Until then, expect more consolidation as traders and investors await the next market moving headline.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Italian stocks and bonds are outperforming this morning on the back of reports that a compromise budget deficit of near 1.9% of GDP has been reached. If the news reports are true, this would bring a sigh of relief for the markets as the market had been concerned that a larger deficit number was being targeted by the new coalition govenment.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
Are Not insured by the FDIC or any other federal government agency
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how