While today’s biggest event for both markets and politics will be tonight’s highly anticipated first presidential debate between Trump and Hillary, markets are waking up to some early turmoil in both Asia and Europe, with declines in banks and energy producers dragging down stock-markets around the world, pushing investors to once again seek the safety of government bonds (and yes, flattening the JGB curve even more much to the chagrin of the BOJ) and the yen.
As JPM points out early this morning, stocks are trading poorly pretty much everywhere. Nothing necessarily ‘happened’ as far as single headline but poor trading in Eurozone banks (DB is off ~6%, hitting fresh all-time lows) and a reassessment of last week’s central bank decisions (in particular the BOJ which wasn’t really ‘dovish’ and opened the door to tapering) appear to be the main motivations behind the Mon morning softness. Also the media tone in Brexit-related commentary has turned dramatically in just the last few weeks w/the process now described as a lot more acrimonious and disruptive than initially anticipated.
The driver of sentiment, however, is surely the latest collapse in Deutsche Bank shares, which plunged to new all time lows after a German press report that Merkel will not provide state aid to the German lender, resulting in fresh fears about another capital raise by the German lender, if not worse.
This post was published at Zero Hedge on Sep 26, 2016.
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