A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Global Bond Buying Is Back
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David Atkinson Foreign Exchange Sales Manager
Markets are subdued as we head into the weekend. U.S. equity futures are up mildly. Asian stocks traded slightly down overnight, and European stocks are posting small gains as they head into the last few hours of trading for the week. Oil is trading down a touch. The U.S. dollar is range bound but up over 1% against the Chilean dollar, interestingly. In this week’s penultimate “Global Perspectives,” we discuss how emerging market currencies have been rallying since the election on hope for growth in 2021.
The bond selloff that we saw earlier in the week seems to have lost steam as we go into the weekend. This is most likely in response to a panel discussion at a virtual conference hosted by the European Central Bank (ECB). Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey and ECB President Christine Lagarde underscored their concerns about the global economy during the pandemic and signaled that the central banks would continue to keep the monetary spigots open to keep their economies afloat. I am still of the opinion that someday they will say that, and the magic will not work, but for now it keeps the global system chugging along.
The most interesting action today is seeing Greek 10-year bonds getting bought and pushing their yields down by 5 basis points to 0.73% — just a little higher than Canada’s equivalent government issue at 0.72% and lower than the U.S. 10-year Treasury, which is at 0.88% as I write.
Andy is back in the writer’s chair Monday. I will end my week of writing with a quote from John Steinbeck from Travels With Charley: In Search for America: “What good is the warmth of summer, without the cold of winter to give it sweetness.” Something to take to heart this year especially. Have a great weekend.
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