24 Jun 2013
Flash: No relief yet for markets - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that there is no relief just yet in the market.
He adds that in China, the PBoC seems still to be committed to keeping pressure on the shadow banking system and isn’t acting to aggressively push money market rates lower. Moving to Australia, he notes that resources sector job loss announcements continue, and in the US Treasury market the sell-off continues. He sees that 10yr yields spiked above 2.6% early in London trading, keeping risk aversion levels very high,, and the dollar well supported across the board. A respite from the risk sell-off requires the Treasury market to stabilise first. He writes, “I fancy that could happen this week, but ‘fancying’ it could happen is a long way short of being convinced. Either way, the best I can see this week is a pause in the risk sell-off as the ‘great carry unwind’ has further to go.”
He adds that in China, the PBoC seems still to be committed to keeping pressure on the shadow banking system and isn’t acting to aggressively push money market rates lower. Moving to Australia, he notes that resources sector job loss announcements continue, and in the US Treasury market the sell-off continues. He sees that 10yr yields spiked above 2.6% early in London trading, keeping risk aversion levels very high,, and the dollar well supported across the board. A respite from the risk sell-off requires the Treasury market to stabilise first. He writes, “I fancy that could happen this week, but ‘fancying’ it could happen is a long way short of being convinced. Either way, the best I can see this week is a pause in the risk sell-off as the ‘great carry unwind’ has further to go.”