Market Action

• Global stocks had their best week of 2016 thanks largely to softer expectations from monetary authorities. China continues to inject cash into the economy and reported strong credit growth last month. Meanwhile European authorities articulated a strong commitment to reflating the Eurozone and the Fed minutes revealed a Board disappointed with recent economic fundamentals.
• Crude markets saw a sharp jump on Tuesday after a reported agreement on production limits was reached between Saudi Arabia, Russia, Qatar and Venezuela. The deal was contingent on other OPEC members agreeing and would see production limited to January 2016 levels. Analysts quickly commented that such caps would do little to narrow the gap between demand and supply.
• The OECD lowered its projection for global economic growth to 3% from 3.3%. Cuts to growth forecasts have been a regular occurrence from the organization over the past few years. The OECD also made news this week stating that Japan had exhausted all its options to stimulate growth and said the country needed structural reforms.
• Mexico surprised global markets with an interest rate rise this week and also announced plans to cut spending. The peso hit an all-time low earlier this month and is frequently used by traders as a play on Emerging Market volatility thanks to the currency’s liquidity. Fundamentals remain encouraging according to economists, adding surprise to the move.
• David Cameron and EU leaders came to an agreement on a set of terms for Britain to remain a part of the EU. The British PM stated the country will hold a referendum on June 23 to determine membership moving forward. Various polling sources have the decision as virtually a tossup at this point.
• Despite the positive week for stocks across the globe the risk appetite did not translate into investors turning away from bonds. Long-term bonds remain at recent highs and futures markets project an additional rate hike by the Fed as less likely than the start of the year.

View Full Market Update