Market Comment | Expectation of further Fed rate cuts boosts bond buying

Summary

Risk-off mood prevailed in financial markets this week, with key volatility indicators (VIX and the MOVE) hitting near two month highs amid a string of disappointing US activity data and worsening trade tensions between the US and Europe following WTO’s ruling.

Key points

• Key points:
• US payrolls not as soft as it seemed, but wages disappointed.
• Market expectations of a 25bps Fed rate cut by the end of October increased to 90% amid weak data.
• Equity indices tumbled but clawed back some losses as expectations of further monetary easing rise.
• The US dollar weakened slightly.

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