EBC Preview : The calm before the storm
We are onside with consensus in expecting no change in monetary policy this week. Now the German court challenge has been defused, the ECB can focus on the future of its bond purchases. Technical discussions should concern the likely slowdown in the path of bond purchases this summer, further flexibility in the PSPP parameters, and early talks about the Strategy Review that is due next year, especially regarding climate change. The ECB is likely to remain on alert as the second economic wave of the COVID-19, characterized by business restructuring and permanent closures, is about to hit the Eurozone and fragilize the banking sector.
Market Quick Take - July 10, 2020
A surge in coronavirus cases and deaths have soured the risk sentiment ahead of the weekend. The S&P 500 trades near the low of the week, crude oil extending its losses on demand concerns while gold has struggled to ignite fresh buying momentum above $1800/oz. The dollar once again acting as the go-to currency while bond yields dropped in response to a well-received 30-year debt auction. An eight-day buying frenzy in Chinese stocks paused with Beijing showing some unease over the speed of the recent rally.
Market Quick Take - July 9, 2020
Risk is bouncing back broadly in equities but the real show is in Chinese equities, US technology stocks and then gold which has managed to stage a convincing breakout above 1,800, which will most likely attract trend-following CTA hedge funds adding more fuel to the momentum.