The Chinese data did print hot overnight (4th QTR GDP +10.7%, higher consumer inflation of 2% and Retail Sales up 16.9%. HOT!). We did ultimately get much of a repeat of the yesterdays risk averse trade, with the Dollar and Yen winning out against the high yeilders for much of the day. Any chance of some kind of significant recovery killed off by Obamas’ speech on wanting to introduce limits to Bank’s trading.
During the speech we seen the Dollar spike lower with the equities plunge, action which is at odds to the pattern we have been getting recently. I assume the market viewed the potiental new regulation as hurtful for the U.S economy and thus also the dollar, the yen being the big winner in the markets flee from risk following Obamas’ comments. S&P finished down 22
points and the DOW dropped 213 points, its worst loss since Oct 09. (putting it in the red for the year.)
I really dont have much more to add to that, how long will the risk aversion continue? how serious will the market deem Obamas’ plan’s to reign in Bank trading practices? How much of an impact will Chinas’ impending rate hike really have on the risk trade? I dont know. Market may have some stuff its needs to work out at this juncture before it can make its move back up.
Tomorrow is quiet on the scheduled data release, with only GBP Retail Sales personally noteworthy, of course that doesn’t mean we wont see more volatility heading into the weekend. I will be looking to tighten up and limit my risk exposure as much as possible over the next few hours.
