Weekly market analysis by Lloyds TSB

This old market saying has relevance to the current position of the financial markets and particularly sterling. Last year the equity markets plunged and bonds yields were pushed to wafer thin levels as the market was preoccupied with survival and protection of capital.

This old market saying has relevance to the current position of the financial markets and particularly sterling. Last year the equity markets plunged and bonds yields were pushed to wafer thin levels as the market was preoccupied with survival and protection of capital. Whilst this is understandable from a short term scenario, the next few months will be important to see if that capital would be better rewarded elsewhere.

 The current indications paint a more positive picture, even if they remain tentative. Firstly bond yields continue to rise in core yields from the two year towards the most sensitive 30 year space. This needs to be explained as it is possible the market is tentatively looking for bargain basement opportunities outside of the safety of fixed income. Secondly, the commodity markets continue to base and push higher despite the bearish sentiment. Oil is a notable laggard, but the bears should have firm control of this as I haven’t heard of a single short term bull, yet the market remains above $40.00.

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