Gerald Fitzgerald’s Market Review July 1st

LAST WEEK IN 30 SECONDS...

Markets ticked marginally lower last week as investors awaited further information on President Donald Trump’s meeting with Chinese President Xi Jingping. Whilst the ongoing trade discussions, or lack thereof, have investors on edge the subsequent agreement by both sides to resume talks at the weekend has been received positively.

Global equities in euro terms finished the week -0.5% driven in small part by a stronger Euro versus its major currency peers.
Government bond yields continued to trade lower last week with the German 10-year yield trending at -0.33% and the US 10-year yield falling to 2.00%.

THIS WEEK IN 30 SECONDS...

Markets will digest the announcement of further talks between the US and China at the G20 summit this week, which has been received positively by investors thus far. Political discussions continue to take centre stage within Europe as parliament leaders are chosen for the next 5-year term. Elsewhere, the conservative party leadership continues in the background with Boris Johnson still firm favourite to land the unenviable position of guiding the UK to full Brexit.

From a data perspective Eurozone Retail Sales are due for release on Thursday with US unemployment and non-farm payrolls updates due for release on Friday.

ITALIAN BORROWING COST LOWERS

Yields on government bonds have fallen significantly over the past number of months. One big winner has been Italy where yields on their 10-year bonds have now fallen to approximately 2.0%, a level similar to that of the US. A softening in stance by the European Commission on Italy’s budget along with positive employment data have contributed to the reduction in the cost of the country’s borrowing.