Financial markets update
US 10-year Treasuries reached a 3-year high last Friday of 2.642% - fuelled by continued optimism over the American economy and the prospect of continued monetary tightening. Bill Gross, the So-called ‘Bond King’ of PIMCO asset management, has loudly declared the end of the bull-run in bond markets, and is convinced that renewed growth and inflation will cause a significant uptick in yields
Brent crude – at $45 just seven months ago – hit a three-year high of $70.37 last week, powered by strong global demand. Despite bullishness from hedge funds, many are wary of oil’s future price prospects given the enormous supply of shale oil coming onto market from the US. Indeed, US oil production is set to exceed Saudi Arabia’s this year
The US dollar index – a measure of the dollar against a weighted basket of other currencies – hit a three-year low last week. A continually weak dollar has benefits for the American economy, American multi-nationals repatriating earnings from other currencies and emerging economies stuck with large amounts of dollar debt. As such, the dollar’s fall has informed many bets on asset markets
The pound has achieved its longest winning-streak against the US dollar since 2014 – hitting a post-Brexit high of $1.39. This is especially significant given the psychological importance of hitting the $1.40 level – which, historically, the market has seen as the floor of the currency.
The US stock market has achieved a record 395 days without a 5% reversal – as measured by the S&P 500. The index is up 24% since Trump’s election alone. Despite uncertainty induced by the Trump administration, particularly around international trade, the administration’s deregulatory efforts and stimulating tax measures, combined with a surging US economy, have helped to buoy US stock markets to record highs.