|Wed, July 6, 16|
Global equities are under pressure in the pre-US cash session retracing advancements seen immediately post-Brexit. Flight to safety is certainty the theme as global treasury yields continue to plummet. UST10Y Yields touches 1.33 level in the overnight session as DXY bids up mid-96 handle. If DXY maintains above 96 handle, we believe an upside breakout could form for FY’16 time frame of 102 price target. In return, WTI breaches tags the 45 handle with concerns of overcapacity weigh on prices. Our view is the WTI market is focused on FX, China Petro Reserves, and Rig Counts. FX was certainly a hot topic in the Asian session has USDJPY slams to the low 100 handle. AUDJPY continues to print at 4 year lows in the 74 handle as regional health is ailing. PBOC reignites the devaluation of CNYUSD now printing .1494 level as US markets have ignored. Over to EU, where banks and property management companies are under immense pressure. Latest round of fear is Monte Paschi bank being halted, along with a shorting ban. On top of this, Deutche Bank and Credit Suisse plummet to new lows. GBPUSD tagged the 1.27 handle as our targets for the year is 1.20 handle. EURUSD dropped from the 1.11 handle to the low 1.10.
Overnight analyst quotes, the euphoria is certainly gone by now: “Everyone is trying to react to a situation we’ve never been in before,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “We’ve had shocks to the system before, but we haven’t had one like this. And we won’t know the answers for a long time.”