We had a heavy news flow over the two previous weeks, and it was much less the case this week.
We had a heavy news flow over the two previous weeks, and it was much less the case this week. Yields are on an uptrend but moves are not that large this week, apart from the Gilt market. Equities do not move much as well and stay in a tight range. FX markets are somewhat more volatile, however without outstanding moves.
What was key this week?
- Oil continues to trend up gently
- Pressure on Deutsche Bank dwindles
- Earnings season has started in the US with an Alcoa disappointment, but US banks first announcements were above expectations on Friday. We will probably get a traditional season: above expectations (EPS previsions have been revised downwards over the past few weeks). This should support equity markets over the next fortnight.
- FOMC Minutes were a nonevent. They confirm they will hike in December provided no accident happens, but it is already priced in by fixed income markets (66% probability of a hike)
- The dollar is stronger than most currencies, which is not very positive for EM this week
- Trump continues to suffer in polls
This week we have ECB on Thursday. Market do not expect anything major but hope to get some indications about what ECB could announce in December. We do not see a potential for a large deception, but we could have some clarity about the potential tapering that shook up markets two weeks ago. This could be dovish at the margin.
La Française’s Essentiel Markets brings you an insightful analysis of the latest financial news by François Rimeu, Head of Total Return at La Française Asset Management.