Hello everyone! Here’s what moved the markets this week in short.
Equity markets stories:
-> On Monday the US National Bureau of Economic Research (NBER) officially named February 2020 the last cycle’s peak and announced that the US economy is in recession (4 month under way now).
-> Paradoxically on the very same day S&P500 turned green for the year, erasing most of the Covid-19 sell-off:
-> The major macro event of the week was the two-day Fed meeting and its announcements. on Wednesday Chair Jerome Powell pledged to keep rates around zero for at least two years and the new dot plot (a scheme of voting on interest rates from all FOMC members) was pretty dovish. Fed also published its growth expectations for 2020 at -6.5% and for 2021 at +5%.
-> Also on Wednesday the tech-heavy Nasdaq100 surpassed 10,000 pts level for the first time.
-> On Thrusday the market was hit hard by renewed fears of a second virus wave, as some US states like Texas and California reported increased hospitalization levels, as did some EU countries. The fears led to a huge sell-off: EU markets were -4-5% and US ended even worse off with S&P500 -5.9% and Nasdaq -5.3% in one day. These were the biggest one-day drops since March. American Airlines, Delta Airlines and United Airlines ended -7% or more each for the week. Banks such as JPMorgan Chase, Citigroup, Wells Fargo and Bank of America — which have surged amid expectations of improving economic activity — were also down more than 10% on week.
-> Effective weekly index changes: S&P500 -4.8%, Nasdaq -2.3%, EuroStoxx600 -5.7%, DAX -7%, Nikkei225 -2.4%.
Other markets events:
-> Bonds: US yield curve (10y-FF) moved lower to end the week at 0.58% as Thursday equity sell-off triggered search for safe haven, German curve (10Y Bunds-3M) also ended narrower at 0.09% with 10Y Bunds at -0.44%, High Yield Spreads moved higher endig at 6.4%.
-> Commodities (ex oil): Gold added 1%
-> Oil: ended the week -2.1% as investors feared lower demand should the 2nd virus wave develop further
-> Currencies: less action seen in FX this week. DXY (Dollar Index) +0.2%%, EURUSD -0.3%.
Major macro events: (times are CET):
Next Week’s major macro events:
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