Market Action

• US equities followed up on last week’s highs by resoundingly breaking out of their range bound trading zone of the past couple of years to set brand new peaks. Financials led the rally thanks to interest rates bouncing sharply off their all-time lows as well as better than expected earnings results from a number of key banks, including JP Morgan
• Japan’s markets surged this week, rising over 9% following elections that give PM Abe a stronger hand on affairs and more freedom to reform the country. Additional fiscal stimulus is expected shortly, with chatter of helicopter money policies being a possible prescription.
• China’s economy grew by 6.7% in Q2, slightly better than economists had forecasted. The underlying data continues to show a divergence between the country’s weakening industrial sectors and relatively stronger service portions.
• The Bank of England held off on a widely expected lowering of interest rates, despite Mark Carney’s comments on the need for easier policy in the wake of the Brexit vote. The pound rallied after the bank voted to stand still, putting up its best week against the dollar in years.
• Global crude supplies have gone through an “extraordinary transformation” according to the International Energy Agency. The group stated that while the market was near balance in Q2, high stocks continue to put downward pressure on prices. As a result of curtailed US production OPEC has generated a record proportion of oil production according to news reports this week.
• Germany issued 10-year bonds this week with a negative yield, meaning investors who hold the issue to maturity have guaranteed a loss before accounting for inflation.

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