Market update: Traders continue to decrease their risk, Copper marches higher, Russian inflation at record low

6 Sep

by Mihály Tatár

Good Morning!


  • With the US returning from Labor day holiday, traders kept trying to decrease their risk from the Korean developments and a potential US government shutdown, taking profits in equities (SPX -0.76%, Nasdaq -0.93%, MIB -0.24%, Nikkei -0.18%, Shanghai -0.34%, Kospi -0.30%), and hoarding safe assets like US Treasuries (the 10Y yield crashed to 2.05%, the lowest since the November elections), Gold (1342 USD) and the Yen (USDJPY 108.50). With Russia rejecting new sanctions against North Korea (they are ’useless and ineffective’ according to Putin, and he must know – instead of a collapsing economy, as journalists forecasted after the 2014 sanctions, the Russian inflation just hit a record low, 3.3% annually for August, strengthening the Rubel further), investors even cut back on the favorite bank investments (Goldman Sachs -3.7%, JP Morgan -2.5%, Bank Of America -3.2%), – they are the most sensitive to a passive-turning Fed and a deadlocked Congress. The one-way, into-bonds trading could be felt on the European markets as well, with the 10Y yield Italian yield falling back under 2% and BB- rated Serbian 2020 USD bond yields falling as low as 2.6%. On the positive side, however, Copper marched higher as forecasted and just reached a 3Y high (317 USd – an original  way to fear for global growth), – resulting the Polish Stock Exchange rising to a two-year-high on miners -, and the GBP broke over 1.30 against the Dollar after the Labour party essentially launched an all-out political attack on May’s Brexit plans.


  • Helped by a very bullish call by Goldman Sachs, oil prices erased all their Harvey-related losses (WTI 48.60, Brent 53.20 USD), with the bank arguing that the large reconstruction efforts will boost demand in the coming months. (I also suspect that some good-sized geopolitical hedging also went through the market). Oil analysts note that there is a strong anti-oil sentiment growing in Norway (elections are due on 11/Sept, with the Green Party and other anti-exploration groups making rapid gains in popularity), not helping the industry which already lost 50.000 jobs since the oil price crash.


  • Showing again that the end of the refugee crisis is a merely a German political invention, hundreds of asylum seekers had to be forcefully evicted in Rome from the Piazza Venezia  – usually enjoyed by tired tourists -, resulting in ’urban warfare’, according to the Italian news media, with 18 injured. (With the approaching 2018 elections, the Italian government tries to win time by enlisting North-African militias to hold back refugees and push up the market price of human trafficking, we will see how well that works out in the long run.)


Have a nice day,


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