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Will equity markets demand substantial central bank monetary expansion?

*Financial Times, by Jamie Chisholm, July 12, 2012

”Global stocks are on course to record a seventh consecutive day of declines as the latest batch of central bank monetary policy manoeuvres fail to counteract worries about fading economic activity.

The FTSE All-World equity index is down 1 per cent as the FTSE Eurofirst 300 endures a loss of 0.8 per cent and after the Asia-Pacific region shed 1.7 per cent.  Wall Street’s S&P 500 is slipping 0.7 per cent at the opening bell.

Risk aversion is the dominant theme, particularly with regard to commodities and growth-sensitive currencies.  Copper is down 1.5 per cent to $3.39 a pound and the Australian dollar is off 1.3 per cent to $1.0116.

Conversely, money is moving into fixed income bolt-holes as the 10-year US bond yield contracts by 2 basis points to 1.49 per cent, 5bp above a record low, and German Bund yields are down 4bp to 1.25 per cent.  Berlin, London and Washington this week have all secured record low yields on 10-year auctions.

The dollar index is up 0.3 per cent to a fresh two-year high, pressuring gold, which is down $19 to $1,557 an ounce.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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