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Market Talk – November 13, 2015

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All core Asian indices opened weaker and not one recovered ahead of the weekend. Hang Seng and Shanghai were down 2% and 1% respectively, whilst the Nikkei lost 0.5%. That weak trend continued into the European and U.S. sessions with all (Asian) futures markets currently reflecting an additional 1%+ loss. The momentum across Europe has not changed all day, and after cash markets closed, the DAX futures market lost additional ground as the U.S. markets drifted into the close. The DOW, S&P, and NASDAQ are all down over 1% as they maintain a watchful eye on commodities. Data releases (weak Consumer spending and PPI), a few vocal FED speakers, coupled with oil, have been far from supportive. You can expect the Sunday newspapers to all be filled stories of the drop in oil prices and the larger concern — the possibility of the global economy falling yet again. Surely they cannot still be pondering between the inflation/deflation debate!

In the oil market, the big story continues to be when will we see WTI trade below $40! The lowest we saw today was a $40.22 print earlier this afternoon. The spread between WTI and Brent has tended to tighten as prices decline (last saw this at $2.70). On the whole, the price for oil lost around 8% this week. Higher supplies, increased pumping, and a higher rig count are a few of the reasons being voiced by strategists, traders, and economists.

More ECB talk of QE and cuts in the Deposit Rate continue to lift European Bonds and that in turn is squeezing the 10yr TY/RX spread (+173bp). last seen US10yr yield 2.28% and 10yr Bund at 0.55%. Early next week with have the Inflation numbers for Eurozone (Expected 0%) followed by the German ZEW on Tuesday (55.2 expected).