Global Market Commentary - week commencing 18th June 2018


  • The real economy looks strong, with inflation still above the Federal Reserve's 2% target, at 2.8%.
  • As expected, the Federal Open Markets Committee raised rates again yesterday. The rate rise was already priced into the Treasuries market, however, and the day after the news yields dropped.
  • The Fed is taking an aggressive stance towards interest rates but keeping its implementation gradual in order not to depress the real economy. Two more rate rises are expected this year, with a further three planned for 2019.


  • The European Central Bank (ECB) held an important meeting last week in which it announced that it sees overall eurozone economic growth as solid, despite the latest, less than positive, macroeconomic data.
  • The ECB will continue quantitative easing up to December but at a reduced rate of €15 billion.
  • Last week yields increased across the Eurozone, with curves bending upwards. This translated into a tightening of spreads between Germany and periphery countries like Italy.


  • On Wednesday, the Italian DMO sold €5.63 billion in Btp with maturities ranging from 3 to 30 years.
  • Portugal allocated €1 billion in 5 and 10-year bonds, while Germany issued fresh 10 year bonds raising €1.5 billion.