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  • Writer's pictureEdward Ballsdon

Market End of Day Update

Updated: Jul 18

  • Strong rally in US, EUR, UK Government Bond REAL yields (7bp, 15bp and 8bp respectively). The market is NOT preoccupied with how governments will finance their announced huge aide packages to combat the effects of Covid19.

  • Undoubtedly this is due to the "unlimited QE" programs announced by Central banks.

  • Initial reaction is a good performance of risk assets as every one can sigh a breath of relief that the private sector won't have to use their funds to finance government deficits.

  • This positive for EM, Gold, and negative for the $ as deleveraging might abate in the short term. That means vol lower as highlighted in last Friday's post on the importance of Real Yields (

  • Interest rates will now have to remain low for much longer - unsurprising therefore that in this "risk-on" period that bond NOMINAL yields have not risen.

For the moment all is good. No one really wants to understand or think too much about the cost of this bail out. Let's enjoy the bounce until when people start thinking longer term!

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