Overnight the Chinese data that the whole market was waiting for actually missed on the estimate (forecast was 6.9 but actual came in at 6.8) but all was forgiven after the PBOC injected more liquidity combined with rumours of additional supporting measures! The Shanghai Index loved the move and returned a 3% daily push. In Japan, the Nikkei did not do so well as it continued to flirt with the psychological 17k mark. By the time the European markets opened, all had been forgotten and futures were calling for 1%+ bounces on most exchanges. Even oil was reflecting the positive energy (aiding stocks) with Brent trading over $30.25 (+2%). All core Indices traded around unchanged all day but by close of business the nerves had returned and dealers turned defensive again. The U.S. markets were no exception, despite seeing positive numbers earlier in the day, all exchanges backed-off at the end of the day (DOW +0.17%, S&P +0.05%, and NASDAQ -0.26%).
Concerns around the prospects of a global slowdown continues and oil remains the culprit everyone is willing to sell. We did see early positive signs but in late trading yet again dealers do not wish to run overnight inventory. Last prices seen were WTI $27.65 -2.85% and Brent $28.25 -1.8%. Even the gold is losing a little of its safe-haven status with today’s bounce only just exceeding the $1090 price last seen.
That was not true of the U.S. Treasury market, however, where once again we are seeing the 10yr playing with the 2% level. The same could not be said about the European bond markets where we are starting to see the U.S./German spread start to gain traction. The peripheral spreads are also worth keeping an eye on still as the move looks ever closer. 10yr Italy closed this evening at 1.54% (with German 10yr last seen at 0.55%).
