Market update: Further selling on trade war fears, Trump threatens Assad, subdued election moves in the Forint

9 Apr

by Mihály Tatár

 

Good Morning!

 

  • Last week ended  in a negative mood after Trump stayed in his bad cop role and talked about ’the US facing a little pain’ from the trade war with China, but would become ’a much stronger country when we’re finished’ – translation: you Beijing will break sooner than we will. Investors continued to leave the party  (SPX -2.19%, – meaning the index is again testing the key January lows, breaking lower from here would turn the market even more ugly, Nasdaq -2.28%,  DAX -0.52%,  WTI 62.30, Brent 67.40 USD – also pressured by the news that the US oil rig count jumped to 1003, the highest since April 2015). Currencies and bonds moved very little, however (EURUSD 1.2270, US 10Y yield 2.80%, GBP 1.41, EURPLN 4.20, EURRON 4.662, THB 31.25), and traders barely even reacted to the unfolding Syrian events – after the brutal chemical attack that killed between 50 and 500 civilians, allegedly done by government forces, Trump called Assad ’an animal’ and promised a ’big price to pay’. (The US has little political influence remaining after declaring to retreat, but many wonder if a new cruise missile campaign would be started, to warn future chemical bomb users.) The rise of the Libors continued non-stop (the 3M Libor is now 2.34%), and as forecasted here at 0.70%, with 9 trillion USD of US and global loans priced off this rate, weaker corporate and government bonds now start to feel the heat (the Turkish Lira fell to a fresh record low against the Dollar to 4.066 and the Turkish 2Y yield is now 14.6% – the highest since 2009 – , while US corporate bonds started to fall and returned -2.6% this year to their less than happy investors).

 

  • Regarding Hungary, the overnight reaction has so far been zero to the two-third victory of the governing Fidesz party (EURHUF 312.50),  with analysts lining up to warn of tougher conflicts with Brussels but market players – having been positioned for a Fidesz victory – watching what the ECB is doing or not doing more intensively. (In my personal opinion, somebody should inform the Left and the mainstream media that the argument-less shaming of the Right on immigration and nationalism is not working anymore – in the US, Trump voters were painted as ’Klu Klux Klan sympathizers’, in Britain ’old countryside whites’, in Italy as Mussolini-fans, and in Austria and Hungary as ’stupid xenophobes’, instead of left-leaning parties trying to come up with something attractive. Shocked foreign commentators point out that out of 199 mandates, 159 were won by right-leaning candidates, and the defeat of the Left was similar in Germany and Italy.)

 

  • Qatar will start investor meetings this week to issue 5, 10, and 30 year bonds. How this project fares is closely watched for several reasons: 1. The emirate is still under Arab boycott, forcing its sovereign wealth funds to sell dozens of billions of Dollars of assets to save the economy since the blockade began 2. the prices will be a good guide on how risky the market finds cash-stripped oil emirates.

 

Have a nice week,

Mihály
 

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