Gerald Fitzgerald’s Market Review September 16th

LAST WEEK IN 30 SECONDS...

The European Central Bank (ECB) took centre stage last week as Mario Draghi delivered fresh stimulus measures, lowering deposit interest rates by -0.10% to -0.50% and initiating an asset purchase programme amounting to €20bn per month of primarily sovereign and corporate bonds until Eurozone inflation reverts to just under 2% per annum.

With investors moving to a more risk-on position following the ECB announcement and positive data releases over the week, government bond yields moved higher with the US 10-year treasury rising by 0.35%, whilst gold fell by -1.8%. Global equities, in euro terms, finished the week +1.1% higher and are now +22.1% for the year to date.

THIS WEEK IN 30 SECONDS...

The week ahead sees the turn of the US Federal Reserve to deliver its latest interest rate announcement. With a further interest rate cut priced in, anything short of a -0.25% rate cut will see further market agitation and an irate US president.

From an economic data perspective, US industrial production numbers for August are due for release on Tuesday whilst Eurozone inflation and consumer confidence releases are due on Wednesday and Friday respectively.

HIGH YIELD BOND APPEAL CONTINUES

Known to some as sub-investment grade bonds and others as junk bonds, High Yield bonds continue to appeal to yield starved investors. Whilst rhetoric of a slowing global economy pushed the yields higher at the end of 2018, the opportunity of obtaining a positive yield continues to draw investors to this asset class.