Snapshot - Economic & Strategy Viewpoint

Caspar Rock: Monday markets - the week ahead on 19 August

Markets remain troubled by a range of factors including Italian political events, weakening European economic data – and the inversion of the yield curve.

19/08/2019

Caspar Rock

Caspar Rock

Chief Investment Officer

  • Last week saw markets particularly excited about the inversion of the yield curve (where short dated bond yields are higher than longer term ones), an historic indicator of recession.
  • This is only a leading indicator with a significant lag. Previous instances of yield curve inversion saw stronger equity markets before any recession.
  • Elsewhere markets were troubled by domestic political events in Italy and Argentina.
  • This week will bring publication of the minutes of the latest Fed meeting at the end of July (where rates were cut).
  • The G7 meet in Biarritz over the weekend, and there will be side discussions about trade and Brexit.
  • Given thin markets volatility cannot be discounted.

 

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