Hey hey 🙂 Summer is here finally. For most of you it’s time to take your time off and rest after hard work for most of the year. But markets never sleep. I remember very well both August 2011 and 2015, when Summer became hell for most of people, as sudden developments took most off guard and markets went crazy due to decreased liquidity, causing mispricing of many assets. In 2011 the reason was the famous downgrade of US sovereign debt rating by Standard&Poor’s to AA+ from AAA on August 5th 2011. That happened first time ever and caused an almost 15% drop in SP500 in just a few days and a lot of turmoil around the world, especially in Emerging Markets. The 2015 sell-off had actually a couple of reasons, but the most direct one was the devaluation of the yuan. Along with a slowing Chinese economy, Greek debt crisis and the effects of ending Quantitative Easing, the sudden yuan devaluation caused a very sudden 12% drop in the SP500. So be aware SmartInvestors! Don’t let anyone take you off guard 🙂
-> On Tuesday the tech-heavy Nasdaq100 broke another historical record touching the level over 10300pts intraday led by Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) who all hit fresh record highs amid optimism on the economy outwieghing concerns over Covid-19 resurgance.
-> The worries came back as soon as Wednesday though as some of the US states like Florida and Texas saw cases spike to records again. New York and New Jersey and Connecticut imposed restrictions on travel from hotspot states. SP500 dipped over 2% on that day.
-> The sentiment remained weak and got even weaker on Friday as Texas reimposed some of the restrictions due to rising cases and hospitalisations. As an effect the markets took an over 2% dive on Friday, ending at the weekly lows.
-> Effective weekly index changes: S&P500 -2.9%, Nasdaq -1.9%, EuroStoxx600 -2.0%, DAX -2.0%, Nikkei225 +0.2%.
Other markets events:
-> Bonds: US yield curve (10y-FF) was stable around 0.6% again although 10Y was better bid into the close of the week, same with the German curve (10Y Bunds-3M) which ended 0.06% with 10Y Bunds at -0.48%, High Yield Spreads at 6.3% rising slightly whole last week.
-> Commodities (ex oil): Gold ended +1.6% and was OK bid all week, as safe havens were searched for
-> Oil: slid on demand fears again ednign -2.6%
-> Currencies: DXY (Dollar Index) -0.1%, EURUSD +0.4%.
Major macro events: (times are CET):
Next Week’s major macro events:
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