Riding the Wave
Traders have begun to find more serene conditions the past twenty-four hours. Global markets have actually started to display ranges without rampant volatile bursts. FX, commodities, stocks and Indices have all been capably traded without any major surprises. Current Account and Final GDP numbers have already been published in the U.K. this morning. The trade numbers from Britain were negative and the GDP met its targets head on.
Later today the U.S. will issue its Weekly Unemployment Claims and Chicago PMI. U.S. data may return to the forefront for investors as the Brexit concerns fade away. Economic activity from the States has been rather poor within a few key sectors and this has not gone unnoticed. Yesterday’s Pending Home Sales numbers dropped much more than expected, manufacturing readings have shown an almost recessionary bent and growth has proven challenging in the States.
The key for traders will be the ability to ride the wave that has been produced by the Brexit storm and follow its trends that have been created. The GBP The GBP The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More was sold off fast last Friday, but these past few days of trading have produced good opportunities for value seekers. Certainly there are no sure things, but for investors with the capability of judging the seas an opportunity might await them. While many analysts have been keen to throw the GBP over the side of the boat, it appears many others see an opportunity long-term for Sterling The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More at these levels.
Equity Indices have also proven to have more tenacity than many believed. Mass hysteria was heard far and wide as the Brexit news made it initial waves, but the fact is that many stocks have rebounded nicely the past two days on global bourses. Banking shares are still important to watch, but many of them have found takers the past twenty-four hours. One of the key barometers for investors will continue to be the yields on international government bonds and they have begun to find less pressure in the short-term.
There are no guarantees in the markets, but trading ranges now are such that traders can begin to feel that it is safe to surf again. The Americans will begin to leave their offices early and many will not come back until Tuesday of next week. The Independence Day holiday should provide traders with an opportunity to take advantage of slower trading conditions with less volume in the broad markets. It is also good that stability has climbed back into the markets allowing many financial institutions to relax a bit after last week’s wild ride.
Early tomorrow morning from Asia the Manufacturing PMI and Caixin Manufacturing PMI readings will come from China, which could prove to be an interesting catalyst going into the weekend. The Chinese economy is still under an immense amount of pressure and the manufacturing statistics early on Friday are expected to have recession A recession A recession A recession in economic terms is a period of downturn when growth is in decline for a sustained peri... More in economic terms is a period of downturn when growth is in decline for a sustained peri... More in economic terms is a period of downturn when growth is in decline for a sustained peri... More like leanings.
The global economy is still very stagnant for most large economic spheres. The Brexit troubles provided many investors an excuse to rid themselves of bad positions and quite possibly an excuse for some governments to blame some of their economic troubles on the situation. This capability for governments in Europe, Asia and America could prove interesting in the next couple of months.
Most major economies had difficulties before the Brexit and their Central Banks have been criticized for monetary policies in various degrees. Mario Draghi of the ECB The European Central Bank The European Central Bank, ECB The European Central Bank, ECB, is the Central Bank of the European Union and sets the monetary poli... More , is the Central Bank of the European Union and sets the monetary poli... More , ECB, is the Central Bank of the European Union and sets the monetary poli... More has scored a lot praise recently for the manner in which he has helped the continent battle through stagnation The term stagnation The term stagnation The term stagnation in economics means a period of time in which an economy is achieving little grow... More in economics means a period of time in which an economy is achieving little grow... More in economics means a period of time in which an economy is achieving little grow... More and his insistence that certain E.U. nations must change their business and regulatory practices, but President Draghi may find the sleighing tougher in the months to come if the European Union decides to play hard ball with the U.K. instead of creating an amicable separation agreement.
Traders need to take advantage of the waves that they are riding now. Opportunities exist and the waters have been calmed, but the sea is a rough place and good weather can change fast. Risk appetite may be back on the table going into this weekend, enjoy the tranquility.