Stocks: Investors remain on edge.
The rebound of last week, of course, allowed key indices to leave the area of the recent lows, however, financial markets still remain wary. On Friday a new wave of pressure created data on the labor market in the United States.
The report for October showed an increase of employment by 250 thousand and the acceleration of wage growth to 3.1% yoy (the highest level since 2009). In addition, it became clear that unemployment remains at the same level – 3.7%, the lowest since 1969. Return data strong fears that the fed will aggressively raise rates in the coming months, keeping inflation under control.
The trend of curtailing stimulus was supported in a Monday morning comment of the head of the Bank of Japan. Kuroda noted that the strengthening economy allows you to refuse excessively soft monetary policy.
Just over a week ago the ECB President pointed to the preservation of the plans to curtail QE and explained his position on the rate hike less than a year.
By the way, his intention more decisively to raise rates, if Brexit will run smoothly, last week hinted the Bank of England.
This tone from the large and influential Central Bank in developing markets concerns about liquidity in the markets. Earlier, at the beginning of 2016, easing from the ECB and the Bank of Japan and a pause in the increases from the fed, helped to keep the markets from collapsing in the Wake of fears around China. This time the situation is somewhat different.
Although at the moment the Chinese economy is doing better than three years ago, the decrease in activity is thought-provoking.
Published on the morning of PMI in the service sector marked a decline to lows for the year, and composite – has fallen to the level of 50.5, which is the lowest level in more than two years and speaks close to zero growth.
The determination of the Central Bank of the developed countries in the folding of stimuli able to trigger the outflow of funds from emerging markets and even result in a new wave of flight from risk, as it was in 2014 and 2015. Then the markets believe the promises “not to tighten policy without regard to the financial stability” in foreign sites. But it seems that the epidemic focus only on the domestic situation spans and Central banks.