Markets are long equities and bonds

Markets are long equities… and bonds. Broad-based return seeking behavior continues to dominate, sending global rate curves and safe haven currencies lower and equities higher. News that the BoE was unable to fulfill its bond purchasing quote indicates that central banks policy is running out of rope but we are not yet at that reflection point. In FX, high-carry currencies continue to attract inflows despite questionable underlying fundamental and strong macro-headwinds. In the background, China’s weak economic data provided further evidence that activity remains uncertain. In Russia, inflation remains subdued providing the central bank with room to ease monetary policy. In Switzerland, the effect of Brexit remains an unknown; however, the overvalued CHF makes defending export competitiveness difficult. Finally, in the US, the strong consumer has begun to buckle as retail sale stalled. With US economic data trending lower, expectations for Yellen to signal tighten at Jackson Hole has becoming significantly unlikely.

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This article is a guest blog written by Peter Rosenstreich from Swissquote