Global stock markets remain under pressure after Friday’s sell off as the continues to focus on US treasuries and the chance of a Fed cut later this year. Asian markets took a big hit yesterday as part of the follow through from Friday’s drop in the US, however we saw less drastic moves across the other trading sessions. Investors are watching US treasuries very closely as the market is now pricing in much higher chances of a rate cut from the Fed this year, the barometer 10 year yield dropped as low as 2.38% last night, it was trading above 2.6% before last weeks Fed meeting . The dollar drifted lower over the course of the day with the Dxy finishing the US session around 96.50. Oil remained around familiar levels near recent highs but Gold continued to drive higher in the current environment climbing over 1% on the day to trade comfortably above 1320.
The pound remains volatile as Brexit updates continue to come swiftly, the latest from the UK is that parliament have agreed to hold a series of indicative votes later this week on various options to attempt to break the ongoing deadlock. Theresa May had earlier admitted that she did not see her deal passing through parliament and this put some pressure on the currency. Investors remain extremely cautious as a plethora of potential routes may now be once again opening up for the Brexit process. It does appear that the ‘middle ground’ route which PM May was trying to take the UK down has now been rejected and now we have potential for both extremes to come back into play ie. a no deal Brexit or potentially a second referendum and no Brexit at all.
Looking ahead to todays trading sessions and it’s another quiet day in terms of tier 1 data releases, however we do have a significant number of central bank speakers and they can be expected to add some volatility to a nervous market. Investors will continue to focus on the main sentiment drivers as the trading day progresses but in the current environment expect rallies to be sold into while growth concerns dominate.