Last week, the U.S. equity indices extended their bull run to more than 3,450 days, thereby setting the longest-ever market rally. Investors welcomed the Fed Chairman’s speech at Jackson Hole on Friday, seeing it as a dovish message about the rate of inflation which will only require « gradual rate hikes ». Said differently, Jerome Powell seems to leave the door open to skipping a rate hike at the end of the year, without appearing to pander to President Trump. Like U.S. stocks, European and Chinese stocks climbed after this market-friendly speech. Earlier in the week, U.S. and Chinese officials met for the first time in more than two months to pave the way to a resolution of trade tensions.
Conversely, Brazilian stocks were still under pressure due to presidential race jitters. The Real lost 5 percent against the dollar, bringing the three-week slide to more than 10 percent. Unsurprisingly the $6bn iShares MSCI Brazil ETF saw $710 million of outflows in August, the worst month since inception (in July 2000).
By contrast with U.S. stocks, the greenback dropped against the Euro as Jerome Powell suggested a slower pace of monetary tightening. On the interest rate front, the 10-year yield moved closer to 2.80 percent.
Find the full report here: https://www.trackinsight.com/weekly-flow-report/2018-08-24/global