Bryn Jones, head of fixed income at Rathbones Asset Management, said: “Oil prices are heading south again. The main driver sending yields lower yesterday was more of the same this week for rates markets. A healthy open for gilts, an attempt to sell off, and rally into end of day.
“How long this ceasefire lasts is a pin the tail on the donkey task with Iran pinging more missiles over to Middle East bases after US took out some Iranian backed militants.
“More tankers being targeted too. Rates markets open up weaker as a result. The sell off in chip stocks looks brutal – again. A surge in SKH profits of 557 per cent just not enough to keep everyone happy!
“There’s a significant amount of leverage tied to the company which is undoubtedly exacerbating the volatility we’re seeing in the benchmarks with leveraged ETFs account for approximately six per cent of the domestic ETF market.
“Ahead of the Fed decision this evening. There’s a 30 per cent chance of a hike so a bit of a duff-shoot to work this out.
“In terms of market pricing, this is the most uncertain the market has been into a Fed meeting since December 2018 when the Fed delivered a 25bp hike.
“Warsh keeping his cards close to his chest has not helped this pricing either. Open interest in Fed fund futures surging to a record high is suggesting no one is quite sure about what will happen. Oil prices fluctuating is adding to the uncertainty to Fed decisions.”
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