Gerald Fitzgerald’s Market Review June 10th

LAST WEEK IN 30 SECONDS...

Markets surged last week brushing aside a dismal May on the back of further pledges of market support from the US Federal Reserve and European Central Bank. US markets led the positive movements with the NASDAQ up +3.9% for the week. Global equities in euro terms rose +2.0% for the week, recouping the previous week’s sell-off.

Global government bond yields continued their downward trend driven in part by the rising potential for rate cuts by the US Federal Reserve. The German 10-year bund yield stood at -0.26% at the end of the week, down -0.05% from the previous week’s historical low.

THIS WEEK IN 30 SECONDS...

The ongoing US-China trade negotiations continue this week with no end in sight. At this point in time it may not be in Donald Trump’s interest to get some agreement as the longer it drags on the more likely the US Federal Reserve may have to support the economy by lowering interest rates, for which Mr Trump has strongly campaigned.

From a data perspective this week sees the release of US inflation data for May on Wednesday followed by industrial production data for the Eurozone, US and Japan over the remainder of the week.

TURKEY COULD DO WITH A VULTURE

Inflation in Turkey has stabilised in recent months yet still remains choppy at around 19%. A lack of foreign support both financially and politically has seen inflation and interest rates spiking as the country tries to stabilise its currency and entice foreign support. With the interest rate benchmark currently trending at 24%, the yield on domestic bonds is enticing in particular when compared with US Treasuries. A strong palette to digest the encompassing risk is required, however.