International News – 17 June 2016
As I discussed above, global macroeconomic and political issues dominated market moves this week.
The Federal Reserve gave a notably dovish outlook for US interest rate rises, with a significant rise in the number of Fed members who forsee only ONE additional rise in US rates this calendar year.
The dovish outlook shouldn’t have been a major surprise given the disappointing May payroll figures and fears surrounding the economic blow-back of a so-called BREXIT, however it further fueled safe-haven buying of government bonds.
Japanese, Swiss and German bond yields plummeted further into NEGATIVE territory, Australian bond yields made fresh lows at 2% for 10-year bonds and even US treasury bond yields fell to 4-year lows.
The horrendous murder of Labor politician Jo Cox has thrown an entirely new (and more sinister) light on the entire EU debate for the British and as a result the campaign of both sides has stopped as a mark of respect for two days since yesterday’s horrible news.
Despite the press last weekend suggesting momentum was staunchly in favour of Britain EXITING the EU, bookmakers still favour the status quo, putting the odds of a departure at a little over 38% or 5/2.
The vote will occur next Thursday night Australian time.
In Japan this week, the Bank of Japan chose to leave terms of its current QE plan unchanged, in spite of increasing signs the program was having little impact on growth nor inflationary expectations.
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