Market Report with Paul Wareing - December 13, 2016
Written on the 13 December 2016Onwards and upwards seems to be the way of it at the moment, with stocks , bond yields and the US dollar all heading north. Gold was negatively impacted by that dollar strength and oil maintained its strength on the back of OPEC related confidence.
At home, the Q3 GDP surprised to the downside , indicating that the economy contracted by 0.5% last quarter. This inevitably led to chatter about possible rate cuts but the market isn't convinced and held its view that rates would remain static throughout 2017.Looking forward, the FOMC meeting in the US is finally upon us with markets factoring in a 100% certainty of a US rate rise. This will be initially supportive of the US dollar but given the next expected rise is not until June 2017 we may see a pull back early in the year.
Locally, the unemployment numbers are due on Thursday and will be the main focus of attention. Employment growth has eased of late with increases focused on part time jobs as oppose to full time. A figure of 17,000 is expected.Looking forward , it's hard to look beyond the "Trump " trade as he revels in a sustained honeymoon period. Record highs keep getting hit and it looks close to getting over valued but for now it's best not to stand in the way of a speeding train. A US rate rise will see further strength in bond yields which will potentially see a rotation away from the defensive bond yield proxies such as real estate trusts and into more risk based financials such as the banks.
We shall see.
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