16 Jun 2014
Risk aversion could take over markets - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, remarks the firm tone of the risk-off trade at the beginning of the week.
Key Quotes
"Pictures of atrocities in Iraq, the breakdown of talks between Ukraine and Gazprom, even scandal within the Polish central bank. It all makes for a risk averse start to the week."
"Oil prices are higher, at levels not seen since last autumn, and if the trend goes on, it will have an impact on risk appetite and on US equities. A longer-term chart looks less scary as Brent has been in a $980-130 p/b range since 2011."
"A break above $120 pb would be necessary for real concerns to grow. However, the concerns about Iraq have come at a time when positioning in EM assets has been growing sharply and that matters."
"If I plot the EMBI bond spread against CFTC data for speculative positioning in the Mexican peso, I get a good fit and also a sense of positioning not just in the peso, but in ‘EMFX' more widely. EM longs have been growing pretty steadily since the start of February and while not yet at the levels e saw pre-taper tantrum, theta re big enough to add fuel to the correction."
Key Quotes
"Pictures of atrocities in Iraq, the breakdown of talks between Ukraine and Gazprom, even scandal within the Polish central bank. It all makes for a risk averse start to the week."
"Oil prices are higher, at levels not seen since last autumn, and if the trend goes on, it will have an impact on risk appetite and on US equities. A longer-term chart looks less scary as Brent has been in a $980-130 p/b range since 2011."
"A break above $120 pb would be necessary for real concerns to grow. However, the concerns about Iraq have come at a time when positioning in EM assets has been growing sharply and that matters."
"If I plot the EMBI bond spread against CFTC data for speculative positioning in the Mexican peso, I get a good fit and also a sense of positioning not just in the peso, but in ‘EMFX' more widely. EM longs have been growing pretty steadily since the start of February and while not yet at the levels e saw pre-taper tantrum, theta re big enough to add fuel to the correction."