Week of June 17 2016 Weekly Recap & The Week Ahead
“Buy Fear, Sell Greed” — unknown
1. German 10-year Sovereign Bond Yields Turn Negative For First Time — the yield on the 10-year benchmark German bund fell into negative territory for the first time ever last week, amid global growth concerns and jitters over the U.K.’s upcoming referendum on its European Union membership. The move comes as the European Central Bank has ramped up its bond buying program in recent months as well as investor uncertainty over whether the U.K. will stay in the European Union.
2. MSCI Rebuffs Chinese Equities for Third Time — China’s domestic equities were denied entry into MSCI Inc.’s benchmark indexes for a third time, a setback for President Xi Jinping’s efforts to raise the profile of mainland markets and turn the yuan into an international currency. China was rejected despite a flurry of measures this year to address MSCI’s concerns, including curbs on arbitrary trading halts and looser restrictions on cross-border capital flows. The decision suggests international investors are still uncomfortable putting their money in the $6 trillion market after a botched government campaign to prop up share prices roiled global equities last year.
3. World Health Organization (WHO) Panel Elevated the Zika Virus To A Public Health Emergency — A WHO panel has elevated the Zika virus to a public health emergency, but spurned calls to postpone or move the 2016 Olympic Games, which are scheduled to begin in Rio de Janeiro in six weeks. Brazil is hosting the Games during its winter, when the concentration of mosquitoes that spread Zika and other viruses is low, the committee noted.
4. FOMC Meeting — the FOMC left its target for the Fed Funds rate unchanged at 0.25-0.5%, while the “dots” took a sizable shift. U.S. Federal Reserve scaled back its outlook for interest-rate increases and Janet Yellen signaled rates may stay lower for longer. Also, the Bank of England is also expected to maintain interest rates – at the 0.5% level it’s been for over seven years.
5. Lumber Liquidators Settles With Regulator — the U.S. Consumer Product Safety Commission has ended its probe of Lumber Liquidators (NYSE:LL) for selling formaldehyde-laden flooring without issuing a product recall, while calling for corrective measures it has already largely undertaken. The stock is still down more than 70% since the devastating 60 Minutes report in March last year that plunged the retailer into losses and led to the exit of top executives.
The week ahead — Economic data from Econoday.com:
