A few macro thoughts today
Bonds – global sell-off from ultra-low yields continues as Yellen notes “highlight that equity-market valuations at this point generally are quite high…(however) They are not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low”. Markets remains exposed generally.
Reflecting the bond yield change was this great chart from Fast FT on the Australian bond market:
Greece – “ECB will decide on Greek haircut after next week’s Euro region finance ministers” meeting writes Bloomberg. If you want a real intellectual workout on the rationale for why a haircut/creditor assistance to Greece makes sense read this academic paper
Oil - West Texas Intermediate, the US oil standard, pared earlier day gains on Wednesday of as much as 3.6 per cent to just 0.5 per cent as traders digested a report from the Energy Information Administration that showed US crude stockpiles fell for the first time since January. Yes, lower stockpiles perceived as bad news = skittish market
China – Fitch says that slower economic growth in 1Q15 is broadly as expected given efforts to rein in credit growth since mid-2014. However, downside risks from the ongoing real-estate correction and from weaker corporate hiring intentions will likely lead to further policy easing later in 2015. Worst 3 days for China for a year…
UK election – polls tight, all to play for in coalition building.