Friday, December 2, 2016

Market Outlook

Fear of Italian referendum over the weekend cause a broad sell down across all markets in Asia except the Singapore market which has been enjoying its longest rally in recent memory.

Italian PM  Matteo Renzi's job are on the line Sunday, the PM has said he'd resign if the nation vote no to his reforms. After Brexit and Trump’s election, investors aren’t taking chances.

The global bond rout continued as investors speculated Donald Trump’s policies will fuel inflation.

This blog believe  a further bond rout, would start to impact equities negatively when the current switching out of bond into stocks theme runs out of steam.  This blog believe  at some point between 2.5% and 2.8%  on the 10-year Treasury, equity investors would start view the bond selloff as negative for stock, where bonds and stocks will go down together, a double whammy that will cause a global equity sell off. This will be compounded the  continuing strength of the US dollar in a rising rates environment. It could  trigger a renewed short squeeze on emerging markets and  corporates which have borrowed US dollars .

In the absence a calamity in  the stock market it will be very hard for the Fed not to raise rates in December.

All posts and charts are for educational and illustration purposes only

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