Morning Wire TV: Daily Market Snapshot (video)
Risk aversion continued to work its way through global financial markets yesterday.
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Many of the recently popular trades were amongst the hardest hit. That included the Russell 2000 which was down 2.3 per cent yesterday (after -3.6 per cent on Tuesday) and which had been the recipient of strong inflows at the back end of last year/start of this year. Bitcoin was lower again (-3.6 per cent) and is also off overnight; while US bond yields ticked lower and, in another clear sign of risk aversion, the dollar continued to rally against all/most of the major currency pairs (including the Euro and the pound).
The key question, therefore, that we explore in this brief clip, is whether that risk aversion will persist in the near term, or whether it’s now become overextended, and is therefore about to reverse?
Key macro data out today is relatively light but includes the third estimate of US Q4 GDP as well as the Kansas City Fed business survey for March. Various Fed presidents are speaking today including Bostic, Evans, and Daly and, most importantly, Williams and Clarida. In Europe, central bankers speaking today include the ECB’s Lagarde and the BoE’s Bailey.