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Market Talk — June 15, 2016

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It just felt like most of the day today was waiting around for the FED meeting this evening and I am sure tomorrow we will be saying the same about BREXIT next week! For Asia, the initial concern was that China did not make the MSCI Index. However, all fears were rejected after the first hours of trading as this proved to be the days low and we moved from strength to strength. When you consider BREXIT, Central Bank meetings, and the ongoing global uncertainty, a little slow-down because of the delay in the Index inclusion really didn’t seem that bad! The PBOC fixed the Yuan at 6.600 against the USD which is its lowest level in a few years. The JPY remained bid despite a small bounce (+0.4%) in the Nikkei. At one stage we saw the Yen breach yesterday’s 105.50 level; an indication investors remain concerned and so buy the safe-havens still. In late trading, the selling has returned all core Asian Indices around 0.3% lower following the FED announcement.

Europe maintained the sentiment from Asia resulting in 1% gains for FTSE, DAX, and CAC whilst IBEX returned 1.5%. Yes, Europe had one eye on the FED but has the other (along with everything else) firmly fixed on BREXIT. Today was a relief rally given that Retailers numbers were better than expected, Unemployment surprised and the Rate stands at the lowest (5%) in over 10 years all set the backdrop for a little light relief. The afternoon was much spent waiting for the FED’s announcement and even that just woke the Bond buyers.

Having seen the FED stocks displayed their disappointment into the close losing all the days gains and closing in negative territory. FED Chair Yellen noted in her remarks that BREXIT is a concern but this remains an unknown for all markets. However, gold and bonds liked the news as stocks retreated.

US 10yrs gained momentum closing sub 1.60% to close 1.57%. 2’s gained 5bp (price) after the unchanged to close at 0.67%; closing 2/10 curve at +90bp. German 10yr closed -0.01% closing the Bund/US spread at 158bp. Italy 1.49%, Greece 7.99%, Turkey 9.50%, Portugal 3.32% and UK at 1.12%.