European manufacturing data among the signs of a global slowdown.
Weekly market review and outlook: markets brace for no-deal Brexit
Over the past week markets seem to have settled down a little after the previous week’s heightened movements although the key macro-economic concerns have not gone away. The difference between the two year and 10 year US treasury yields dipped in and out of being inverted while the minutes of the Federal Reserve’s last meeting showed that all policy members voted for a cut, although only two voted for 50 basis points. Markets are pricing in another 25 basis points cut at the September meeting but the 100 basis points cut that the market priced in before the end of the year has been tempered a little by slightly hawkish comments from a couple of policy makers during the week.
While the US still supplies mixed economic data, other parts of the world continue to show signs of a slowdown, the latest European Manufacturing data was once again particularly weak.
Markets remain wary of the Hong Kong situation while there were mixed takeaways from Boris Johnson’s trip to Europe to meet Merkel and Macron. Sterling saw a modest bounce following comments from Europe’s leading leaders but markets are getting used to the idea that a no-deal is looking increasingly likely.
Attention towards the end of the week switched to the G8 summit in France with the US and UK leaders starting to look like outcasts. The grown-ups in the room will look to steer the US president away from having another strop and escalating the trade war with China while reminding the UK leader of potential impact of the most damaging form of Brexit.
The week ahead
The trading week in the UK will be shortened by the August bank holiday, we will therefore have a day longer to digest the events of the G8 summit. So in a week where trading volumes are likely to be thin we thankfully have little economic releases of major significance. Lookout for the revised US GDP numbers for the second quarter, expected to remain at 2.1% while the Eurozone inflation and unemployment figures may give the market something to trade around.
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