Gerald Fitzgerald’s Market Review September 2nd

LAST WEEK IN 30 SECONDS...

Equity markets recovered last week as the ongoing stand-off between the US and China struck more conciliatory tones helping push markets higher. However, demand for high quality government bonds continued with the German 10-year bund yield trending at -0.71%

Italian bond yields fell by 0.29% with the potential for a new coalition government being arranged between the 5-Star Movement and the Democratic Party. The potential coalition which is seen as being more aligned to European Union thinking resulted in a rally in both the Italian equity and bond markets.

THIS WEEK IN 30 SECONDS...

US markets are closed today for Labor Day. With US tariffs effective from 1 September on selective Chinese goods, markets will once again focus on trade discussions between the US and China. Hurricane Dorian hitting Florida may take some of the political focus across the Atlantic, whilst closer to home the political storm continues to howl ahead of the UK’s targeted exit from the EU in October.

From an economic data perspective, German industrial production figures are due for release on Friday along with US unemployment data.

A TALE OF TWO BOND ISSUERS

Not all bond issuers are the same. Both Austria and Argentina issued 100-year bonds in 2017, with both issuances experiencing contrasting fortunes. Argentina who are tinkering on selective default, have seen the yield on their 100-year bond rocketing to 18.9%. Meanwhile, Austria has seen its 100-year bond yield steadily march lower to a mere 0.7%.