Market Action

• Volatility returned to the markets in a big way with the VIX rising 40% and giving stocks their worst day since the Brexit vote.
• Among the factors being cited as the cause of Friday’s sell off is inaction by the ECB. Mario Draghi did not announce any new action in the amount or structure of monetary stimulus, disappointing markets.
• In addition, news reports out of Japan revealed that new easing measures might not be around the corner. The rumors pushed the Yen higher and sent bond yields upwards.
• Bonds joined stocks in the selloff this week. US, German and Japanese yields all rose on a mix of disappointing policy measures. Famed bond investor Jeff Gundlach called the current economic environment too weak to raise rates and exclaimed that it was time to be defensive in the bond market.
• Greece has until the end of the month to implement 13 out of 15 promised reforms in order to get the net leg of aid from Brussels. Greece has assured stakeholders it intends to meet its commitments on reform.
• Oil rose after a larger than expected drawdown of supplies. Despite the price rise analysts see risks that the supply/demand imbalance may not clear until 2018.
• An index of the UK Service sector reached expansion levels for the first time in months. Data over the past week has been strong in light of the Brexit vote.

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