Asset Allocation for December 2018

In November markets moved cautiously in expectations of G20 meeting and the FED chairman Jerome Powell press-conference on monetary policy topic. Corporate news and macro data were sidelines.

Trade tensions between the US and China had a chance to ease after G20. But then Chinese telecom giant Huawei Technologies Co. has been brought under U.S. criminal investigation for illegal Iran Sales and Chinese authorities have been very moderate in rhetoric about a trade agreement with Donald Trump’s administration.

Jerome Powell indicated a possibility of more dovish FED monetary policy in 2019 if the US economy would show weak figures. Such comments caused sharp growth of US Treasuries prices and the formation of inverse bonds yield curve.

Oil prices tested fresh support levels as no evident facts of oil output cuts and Iran shipping volumes to a number of countries have occurred.
In December we are expecting complex negotiations on BREXIT terms. In the UK there is no single support of the economic and trade conditions with the EU.

Threat and challenges in world markets:
  • The trade war between the US and China with EU
  • Monetary policy tightening by the US FED
  • Hard BREXIT

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