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Market Round Up: Clouds over Italy ☁ – Crisis week for EMs 🙊

by | 3 Sep, 2018

 

1. Clouds looming over Italy

Few may have noticed the dramatic yield climb in the Italian government debt auction last week because all eyes were on Turkey and Argentina’s slow and gruelling currency deaths. And yet, it should have raised a lot of red flags across the world.

Duo-populist political party turbulence and wild budget plans are not helping the country with both optimists and pessimists agreeing it can only get worse, although the former does eventually see light at the end of a very dark and long corridor.

Italy’s benchmark bond yields are now only lower than Greece’s in the Euro area. Italian investors are waiting for the government to announce its spending plans, which could threaten the European Union’s deficit limit of 3% of economic output and lead to downgrades from the ratings agencies – making it even costlier for the country to raise funds. In fact, Fitch just downgraded Italy’s bonds to negative.

Related: Market Round Up: Baidu’s Made in China, Brexit in the City, Factory orders give a pep

 

2. Crisis week for EMs

Sticking to the theme of governments and debt funding, events in the Emerging Markets (EM) are going to remain in the limelight this week.

Today we will see the release of Turkish inflation data and the publication of a new fiscal plan by Argentina. And Brazil could fall into further chaos following the courts decisions to ban imprisoned ex-president Luiz Inacio Lula da Silva from running in October’s presidential elections.

Investors can also expect the release of purchasing managers’ indexes (PMI) from many emerging markets, and also Chinese trade statistics. And on Friday the U.S. releases its monthly payroll data, which could be key to determining where the dollar heads after it touched a high in August.

Related: The EU signals it may be ready to compromise with US over tariff dispute

 

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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