Market Talk August 28th, 2015 – Mid-Session

It was a mixed-bag for equity markets across the globe today with two out of three core Asian indices closing higher. The Nikkei and Shanghai produced impressive 3%+ gains this Friday whilst the Hang Seng Index lost 1.05%. In Europe the DAX failed to trade in the black all day but we did see small improvements heading into the weekend for both the FTSE and the CAC (both under 1%). The US did look healthy in early trade but comments by Fed Vice Chairman, Stanley Fischer, suggesting that a September rate increase remained a possibility certainly weighed on an already unsettled trading floor after such a volatile week! The market had already been nervous before his speech tomorrow at Jackson Hole, especially following the better than expected Q2 GDP number we saw yesterday; so his timing was not that complementary.

The US Bond market was the one that reacted the most with yields touching the weeks highs. The curve was hit and we saw around 2 BP flattening 2/10’s early on the comment but later 10’s traded down into the close. The Long Bond (30yr) did perform against 10’s as the yield (2.91%) was seen as too attractive and best levels seen in a while! TY/RX spread closed +145BP ahead of any forward guidance expected over the weekend so it could be an interesting Monday morning.

The US Dollar did like the comment of higher rates are still on the table and we saw gains in the DXY (Dollar Index) of 0.5% on the day with solid performances against Euro, JPY and GBP.

Oil had another good day closing up over 5% for both TWI and Brent (spread closed at $5). Percentages always look good coming from a low base but regardless both were up around $2.50 each. This rally supported the Russian ruble so we saw another strong day there closing +1.5% (65.45).