Pressure points, negative rates and the fading risk rally – Danske Bank

Research Team at Danske Bank, suggests that the pressure points are building in financial markets after 1.5 months of risk rally.

Key Quotes

“Since the G20 meeting in February, the extraordinarily dovish rhetoric from the Fed and policy easing from the People’s Bank of China (PBoC) and the ECB have supported markets, while the global industrial production cycle has stabilised.

The March PMI Manufacturing for the US, Eurozone, UK, China, India, Brazil and Korea all rose versus February where only truly underperforming economies such as Japan and Russia saw PMIs falling. On the face of it, China’s FX reserves for March also rose to USD3,213bn from USD3,202bn previously. But this is due to the fall in the USD in the month.

Indeed, we estimate that the PBoC intervened more in March than in February. As such, the rally in risky assets appears tired and exhausted as new catalysts are needed for the rally to extend.”