After all the drama and activity of the last few weeks we had very staid and moribund trading day yesterday. That’s the long way of saying it’s been pretty boring in the markets overnight. So volatility was down across the board, equities finished the day slightly up, currencies were trading in tight ranges and the only big(ish) news was the cheapening of US treasuries over the North American session.
In the current environment this won’t continue, there are far too many uncertainties in the market and we will see more volatility. The trade turmoil between the US and China is a huge issue and the market is looking for confirmation of how this is going to progress. Currently it doesn’t look like either side is looking to back down and if we do see the implementation of tariffs and retaliatory measures from China then we will see a dramatic shift in global economic growth – The market it concerned about this eventuality but is definitely not positioned for it.
Looking ahead to today’s trading and there’s the potential to see moves across the markets, the global trade situation is not going away but we have two major central banks announcing rates today. The SNB will probably be fairly straight forward, but the BoE has the potential to move markets dramatically, no rate change is firmly expected but investors will be watching closely for any change in sentiment from the MPC and sterling is poised for a decent move after Teresa May got her key Brexit bill passed through parliament last night. The OPEC meeting begins in Vienna and the market will be monitoring developments closely there with the potential for much more volatility in Oil and petro products.