Latest Market Summary
US ECONOMIC OUTLOOK GETS A FILLIP FROM NONFARM PAYROLL NUMBERS
The US economy seems it to be having its best period of growth in decades after the nonfarm payroll data released by the Labor Department showed unemployment at a 17-year low of 4.1%. The steady hiring resulted in lower unemployment and sustainable growth in the output. The Quarter 3 growth rate was approximately 3%. The markets greeted this news as another sign of a strengthening economy, with the DJIA and S&P 500 both finishing the week up by 0.4%.
BREXIT DEAL NEARS AGREEMENT
After weeks of intense diplomacy and negotiations, a settlement has been reached between the UK and EU. The tentative agreement is to be endorsed by the EU at the Brussels summit next week. The divorce bill is likely to be in the range of GBP 36bn to GBP 39bn. The latest development marks a completion of the BREXIT phase one. The negotiations will now enter the critical second stage where more difficult decisions are to be made.
US GOVT BOND PRICES FALL AMID REPORTS OF A STRONG LABOUR MARKET
The US Govt bond prices fell, and the 10-yr Treasury yield rose to 2.383% after the low unemployment figures were released by the Labour Department. The expected rate hike by the FED this week is likely to be one in a series of future rate hikes to prevent the economy from overheating as prospects of inflation became stronger after the release of employment figures and the proposed Corporate Tax cuts.
STERLING & GILT YIELDS VOLATILE AFTER BREXIT DEALS
The pound reversed the early gains it made on Friday after the news of the agreement between the UK and the EU over BREXIT. In the early trading hours on Friday, the pound reached above $ 1.35 against the US dollar however subsequently retreated to $ 1.3377, ending the day at -0.7%. The yield on policy-sensitive two-year gilt hit 0.567% before ending the session flat at 0.51%. the 10-year benchmark yield ended up 2 basis points higher at 1.28%
PRESSURE MOUNTS ON WTO AS THE US PROMOTE ITS NATIONAL INTERESTS
EU officials said that the US is threatening to damage global trade undermining WTO. the US is allegedly blocking appointments to a WTO appellate body that resolves trade disputes thereby sabotaging the system of global trade. US officials said that the WTO needs to adapt the changing dynamics of Global Trade and the challenges it faces. In his recent tirade against the WTO, President Trump accused it of being unfair to the US and at the same time alleged that China, the biggest exporter, has used WTO for its policy of mercantilism.
FINANCIAL SECTOR SEES STRONG INFLOWS OF $ 1.5BN
Investors poured $ 1.5bn into financial sector funds last week on optimism about the prospects of lighter regulation and less tax. This was the fourth consecutive week of inflows into the sector. The potential easing of regulations and corporate tax cuts increase the positive sentiment in the financial sector. Banks are likely to be the biggest beneficiaries of lower domestic tax rates.