After trading up in most indices for the majority of the day, there was a big reversal late on on Fed minutes and primarily contractionary Chinese data. When the supposed growth driver over the world has components of its economy contracting then we know things are still fragile.. but we know this anyways but the stock market continues to ramp up regardless of late, and although we are looking at a sharp pullback at the moment, I think its only a matter of time if current trends are anything to go by before the "bargain hunters" come in and ramp this back up!
The Nikkei 225 is down 1143 for the day with that being the biggest drop in 2 years. This drop shows how quickly things can turn if sentiment changes on a whim, but given the massive rise in the Nikkei so far this year it is not the most surprising thing to see such a pullback although what you would expect over a few days has happened in one day. To see what the real market sentiment is right now, we will see if tomorrow is bargain hunting day or we continue to sell off.
On the Bond front we have had a slightly bid tone to the Euribor spreads as we slowly edge up. Although acitvity remains subdued somewhat it is better then what it was. I have personally trying to just scalp short as we move up, with particular attention to the back end of the curve which seems to be moving the most. I have shorted 7s and 7.5 in Jun15Sep15 looking for 7s and 6.5s as an out. The economy still is fragile which will put a lid on any upward movement, although patience is key.
Looking forward we have UK GDP numbers which should validate that the UK isnt in a recession, but any weaker number then expected will continue to put pressure on cable as we look to breach 1.50.
The Nikkei 225 is down 1143 for the day with that being the biggest drop in 2 years. This drop shows how quickly things can turn if sentiment changes on a whim, but given the massive rise in the Nikkei so far this year it is not the most surprising thing to see such a pullback although what you would expect over a few days has happened in one day. To see what the real market sentiment is right now, we will see if tomorrow is bargain hunting day or we continue to sell off.
On the Bond front we have had a slightly bid tone to the Euribor spreads as we slowly edge up. Although acitvity remains subdued somewhat it is better then what it was. I have personally trying to just scalp short as we move up, with particular attention to the back end of the curve which seems to be moving the most. I have shorted 7s and 7.5 in Jun15Sep15 looking for 7s and 6.5s as an out. The economy still is fragile which will put a lid on any upward movement, although patience is key.
Looking forward we have UK GDP numbers which should validate that the UK isnt in a recession, but any weaker number then expected will continue to put pressure on cable as we look to breach 1.50.
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