This week was marked by huge sector rotations in both the US and Europe, while overall markets were flat or reported a slight negative week on week performance.
These rotations were mainly driven by central banks that now look more focused on inflation risks despite lower energy prices. In the US the strong employment rate may translate into wages increases sooner and later, and the current 2% inflation rate may likely be exceeded in the coming months, which is a concern for the FED despite the moderate GDP growth prospects for 2017. In Europe, the ECB looks now opening the door for tapering, two years after the US normalization, as reflation signals are appearing on the screen. This had a direct impact on sovereign bonds which have almost doubled in two weeks in both Germany (10Y at 0.568%) and France (0.968%), while the increase was rather moderate in the US (12 bp).
This also have direct impacts on equities, the rising rate weighing especially on leveraged, dividend oriented sectors such as utilities, concessions or telcos while banks and commodities were the big winners of the expectations of further reflation.
Spread BNK (banques Europe) / SXXR (Stoxx600 Net Return) : weekly data
Besides financials and commodities the market are still in a middle of a correction phase, with profit taking occurring especially on growth stocks, especially in the technology sector as well as defensive/dividend oriented stocks. However, we don’t believe the inflation/rates may fly out of control as structural deflation drivers such as technology and globalization will continue to weigh. This is more likely a short term adjustment, that may last weeks or several months depending also on the quality of central banks communication.
Gold continued to decrease slightly in the wake of these rates/inflation topics, while the dead cat rebound on oil prices came to an end, following Russian statements it disagree on further production cut and as oversupply coming from shale oil producers looks far from over.
IAU (Gold) : Weekly data
The Euro stood firm versus the USD and looks ready for another expansion wave, maybe towards the 1.20 level that is likely if European rates continue to catch up versus the US one.
Corporates news should come back to the forefront again with Q217 results in both the US and Europe, that may lead the market higher if the good prospects are confirmed.
Retrouvez-nous désormais sur https://phi-advisor.com/fr/
pour bénéficier de nos signaux d’achat et de vente de plus de 300 ETFs !
Nous utilisons des cookies pour vous garantir la meilleure expérience sur notre site. Si vous continuez à utiliser ce dernier, nous considérerons que vous acceptez l'utilisation des cookies.Ok
This week was marked by huge sector rotations in both the US and Europe, while overall markets were flat or reported a slight negative week on week performance.
These rotations were mainly driven by central banks that now look more focused on inflation risks despite lower energy prices. In the US the strong employment rate may translate into wages increases sooner and later, and the current 2% inflation rate may likely be exceeded in the coming months, which is a concern for the FED despite the moderate GDP growth prospects for 2017. In Europe, the ECB looks now opening the door for tapering, two years after the US normalization, as reflation signals are appearing on the screen. This had a direct impact on sovereign bonds which have almost doubled in two weeks in both Germany (10Y at 0.568%) and France (0.968%), while the increase was rather moderate in the US (12 bp).
This also have direct impacts on equities, the rising rate weighing especially on leveraged, dividend oriented sectors such as utilities, concessions or telcos while banks and commodities were the big winners of the expectations of further reflation.
Spread BNK (banques Europe) / SXXR (Stoxx600 Net Return) : weekly data
Besides financials and commodities the market are still in a middle of a correction phase, with profit taking occurring especially on growth stocks, especially in the technology sector as well as defensive/dividend oriented stocks. However, we don’t believe the inflation/rates may fly out of control as structural deflation drivers such as technology and globalization will continue to weigh. This is more likely a short term adjustment, that may last weeks or several months depending also on the quality of central banks communication.
Gold continued to decrease slightly in the wake of these rates/inflation topics, while the dead cat rebound on oil prices came to an end, following Russian statements it disagree on further production cut and as oversupply coming from shale oil producers looks far from over.
IAU (Gold) : Weekly data
The Euro stood firm versus the USD and looks ready for another expansion wave, maybe towards the 1.20 level that is likely if European rates continue to catch up versus the US one.
Corporates news should come back to the forefront again with Q217 results in both the US and Europe, that may lead the market higher if the good prospects are confirmed.