Gerald Fitzgerald’s Market Review December 10th

LAST WEEK IN 30 SECONDS...

Last week the principle narrative was risk-off with a veritable pick ‘n mix selection of political risk weighing heavily on market performance. Trade tensions between the US and China heightened following the arrest of Huawei’s Chief Financial Officer. The fallout from the maligned Brexit withdrawal treaty continued with both French tariffs and Italian budgetary proposals continuing to steer investors towards less volatile markets.

With this turbulence global equities were down -4.1% over the period, with returns on the global equity index now flat for the year-to-date. Perceived “safe haven” assets like German bunds and US treasuries gained as investors sought refuge from equity market volatility.

THIS WEEK IN 30 SECONDS...

Ongoing tensions in relations between the US & China continue to drive market sentiment. In the UK the House of Commons votes on the draft withdrawal treaty. With the chances of its approval slim and little sign of potential alternative options discussed, expect further market whiplashes over the week.

From a data perspective PMI manufacturing data and industrial production releases are due for publication from the US and Eurozone. The ECB meets this week with investors watching closely for any further guidance on the cessation of the monetary purchase programme and 2019 interest rate movements.

GERMAN BONDS – SLOW TO YIELD

With the European Central Bank looking to wind-down their monetary purchase programme at year-end, markets have been slow to price in any element of mission accomplished within German bonds. With the prevailing yield on a 10-year German bond trending at 0.25%, general political and economic uncertainty continues to stifle Eurozone recovery efforts.