📆 Monday, September 16
► The European stock markets started the week cautiously, with the Stoxx 600 remaining unchanged. Traders were bracing themselves for a number of important central bank decisions, in particular the expected interest rate cut by the Federal Reserve, but also the Bank of England and the Bank of Japan, both of which are likely to leave interest rates unchanged but will probably give a clearer outlook on further monetary policy measures. The German DAX fell by around 0.3 % and the French CAC rose slightly by around 0.1 %. There was little movement on the European bond markets, with the 10-year yield in Germany, for example, remaining unchanged at 2.15%. The European markets are focusing heavily on the upcoming decision by the US Federal Reserve, which will play an important role in the performance of global assets this week.
► US equity futures remained stable ahead of the highly anticipated meeting of the US Federal Reserve, with slight gains in the technology sector as expected by our chief analyst. Investors are focusing on whether the Fed will cut the key interest rate by 25 or 50 basis points. The market now predominantly expects a rate cut of 50 basis points (the probability of this currently stands at 59% on the swap markets – see CME Fedwatch Tool (https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html)). Government bond yields have fallen for two weeks in a row in anticipation of significant easing, with the 10-year yield falling to 3.64%. We expect the current rally in US equities to continue, with a particular focus on the Nasdaq 100 and the more interest rate sensitive small caps.
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