International News – 12 February 2016
Beyond the obvious share-market weakness, there was a lot to remark upon, many of which led or contributed to the poor performance of investments during the week.
Concerns for global growth remain front and centre and so moves by the Swedish Central Bank to push deeper into negative interest rates (from -0.35% to -0.50%) further concerned investors.
In Europe, concerns surrounding the capital base of Deutsche Bank (DBK) and several large Italian banks continued to weigh on sentiment and caused the credit-spreads on many major financial institutions to push significantly wider.
The Japanese Yen staged a huge rally against the USD this week, in a move that flies completely in the face of the Bank of Japan’s recent attempts to spur growth by weakening the yen – you’ll recall a week ago the BOJ moved its official rate to negative 0.1% to counter-balance broader currency weakness within the Asian region.
That the Yen has rallied 10% in the face of this attempt to weaken it and in as little as a week, is a massive indication the market is losing faith in the abilities of central banks to influence economies and markets.
Lastly, the Federal Reserve Governor Janet Yellen made comments that should have been entirely expected by the market, which was to say that the path for US interest rates remains higher in light of the encouraging employment outlook, but that recent financial market turbulence could derail the pace of the rises.
In truth, this was perhaps the most predictable remark of what was a very volatile and unpredictable week.
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