Couple of comments on 2 key events this summer
1. Brexit vote 23/6 looks more likely judging by the sharp depreciation of the Pound in last 3 weeks, backed by polls showing gap is narrowing (to zero).
I still believe the British people will do the right thing and vote to remain in the EU and hopefully reform it within using their clout.
If they do remain in, markets will rebound providing a good selling opportunity for longer term holds. Also I plan to sell GBPSEK above 12.10-12.20 if it rebounds from current 11.75 area levels. Volatility is most clearly expressed in the currency which is going to see some dramatic swings in the next 4 weeks so be braced for anything. Again, expect the GBP to bounce back sharply the day after the vote for a couple of days when it is clear Remain camp has won
2. Fed hike in June looking less likely on back of weak payroll & Brexit. Expect hike on July 27th.
Why would Yellen risk raising rates before Brexit vote? Second, any hike must be data dependent, and the most recent US payroll number on Friday for the month of May disappointed with only 38k jobs created vs 162k expected. This may be seasonal, but certainly doesn't strengthen Yellen's resolve to hike. Third, the Fed has made a point of preparing the market well in advance of a hike so it isnt a surprise - they are doing this now and would not be a surprise now if it occurred in July 26-27 rather than June.
1. Brexit vote 23/6 looks more likely judging by the sharp depreciation of the Pound in last 3 weeks, backed by polls showing gap is narrowing (to zero).
I still believe the British people will do the right thing and vote to remain in the EU and hopefully reform it within using their clout.
If they do remain in, markets will rebound providing a good selling opportunity for longer term holds. Also I plan to sell GBPSEK above 12.10-12.20 if it rebounds from current 11.75 area levels. Volatility is most clearly expressed in the currency which is going to see some dramatic swings in the next 4 weeks so be braced for anything. Again, expect the GBP to bounce back sharply the day after the vote for a couple of days when it is clear Remain camp has won
2. Fed hike in June looking less likely on back of weak payroll & Brexit. Expect hike on July 27th.
Why would Yellen risk raising rates before Brexit vote? Second, any hike must be data dependent, and the most recent US payroll number on Friday for the month of May disappointed with only 38k jobs created vs 162k expected. This may be seasonal, but certainly doesn't strengthen Yellen's resolve to hike. Third, the Fed has made a point of preparing the market well in advance of a hike so it isnt a surprise - they are doing this now and would not be a surprise now if it occurred in July 26-27 rather than June.
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