EC Could The Worst Be Behind China And Germany? Or, Hope Springs Eternal

Overview: News that MSCI plans to substantially boost China's equity weighting in its indices and a better than expected Caixin manufacturing PMI and some easing of India-Pakistan tensions helped bolster the risk-taking appetite going into the weekend. This lifting equity and weighing on bonds. China's CSI 300 rose 2.2% for a 6.5% weekly gain. The Shanghai Composite has risen every week this year. Europe's Dow Jones Stoxx 600 is up 0.6% through the European morning and is up a little more than 1% for the week. It has been down only one week this year. The S&P 500 is carrying a three-day decline in tow, but the participants have not given up on the 2800 level and will make another attempt. Bond yields are mostly higher. The US 10-year yield closed above 2.70% for the first time since early February and is edging higher still today. It is up about six-seven basis point this week. The 10-year German bund yield has doubled in the past four sessions to 18 bp. The 10-year JGB yield remains slightly in negative territory. The dollar-bloc currencies are faring the best today, with the yen and Swiss franc doing the worst, which is consistent with the risk on mood.  Although it is off about 0.2% today, sterling is the strongest currency this week on the back of ideas that the risks of no-deal have eased.  

Asia Pacific

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Read more by Marc on his site Marc to Market.

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Gary Anderson 1 month ago Contributor's comment

I don't quite understand how Europe has turned a corner while PMI remains below 50, Marc. Certainly building inventory and lower consumption is not a good thing for the USA, as you point out.