Summary for the 26th of March 2019


The index for volatility (VIX) has been showing expectations of low volatility since the beginning of 2019, even with ongoing geopolitical uncertainty (Brexit, trade conflict, etc.)

The expectations of low volatility earlier this year can be seen as a result of central banks’ changes in their monetary policies and of macroeconomic indicators that have been giving few surprises.

All this was up until last week when the Fed and the ECB both have projected lower growth in future outlook, plus the weak PMI from Germany. The PMI data had given doubt if there were temporarily factors that had been slowing the economic growth.

Central Bank Put has become an established term in the financial market in the past few years. Central banks would implement untraditional monetary policies to encourage risk taking in the financial markets, weak macroeconomic data had led to positive response from the financial market, weak data means more expansionary monetary policy from central banks. This doesn’t seem to be the case anymore, more expansionary monetary policy hasn’t led to more risk taking from the market.

Yesterday’s Ifo Business Climate in Germany rose by almost 1% to 99.6. The data from the manufacturing sector though was still weak, sub index for this sector declined for the seventh consecutive months, lowest value in three years. This shows that there are still slow growth in the export sector. The sub index for services and constructions were the main boost in the Ifo index.

The British Parliament has taken control of Brexit from the British prime minister, Theresa May.  The Parliament will vote over a series of Brexit options on Wednesday and will most likely be over the options of revoking Brexit, a new referendum and difference versions of Brexit.

Indices for 26th of March:
Dow: +0.1% (25th of March)
S&P 500: -0.1% (25th of March)
Nasdaq: -0.1% (25th of March)
Nikkei: +2.2% (26th of March)
Chinese indices: -1.4% (26th of March)
STOXX Europe 600 Index: +0.77% (26th of March)

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