Bond rout continues

Bonds continued to be marred in the aftermath of Trump’s victory. After early uncertainty markets have performed well since the historic election and bonds in particular have been hurt after Trump hinted at a huge bout of fiscal stimulus to drive economic expansion. The US 30 year treasury yield surpassed 3% for the first time since January and UK 10 year gilts returned to levels last seen in the immediate Brexit fallout. German bunds have risen above 1% and Italian bonds hit a 14 month high today above 2%. Leading on from this, markets have genuinely continued a risk-on trend, the Nikkei closing Monday at 9 month highs, as we speak the Dow remains at levels reached on Friday where it closed at an all time high. After an initial strong start where the FTSE 100 moved over 1% higher, the main index closed only 0.34% higher, albeit still a strong day. The dollar also rebounded somewhat to begin the week, the pound as write down 1.1% alongside the euro, down vs the dollar by 1.24%.

Miners, Banks and Construction companies have all been buoyed since the Trump victory, with investors taking a bet on the proposed infrastructure stimulus. Today on the FTSE shares of Barclays (+5.23%) and RBS (+4.37%) topped the index. Taylor Wimpey’s latest encouraging update revealed they expect the FY operating margin to grow, going on to say they’ve seen strong resilience despite a host of curveballs thrown at them by 2016. Shares closed the day a little over 3% higher, and this helped peers alike on the day. Support Services firm DCC’s shares also sat among the top after they announced FY profits are expected to beat expectations.

Oil prices hit a 3-month low today after increased doubt was cast by investors on OPEC’s ability to agree on a production cut at the next meeting. Prices will remain depressed if some form of agreement can’t be reached on the 30th November, but after prices crept above $50 p/bbl in October seemingly the market has lost optimism in an OPEC harmony being reached at the next meet.

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