Money Flows before the start of the European trading session - 08.10.2018

Following the negative sentiment during the Asian session, Europe is turning to a red start on the stock markets during the first trading day of the new week. During the session, I expect declines in the banking sector, which was under the most intense pressure in the previous session.

Today's session remains calm from economic news. Traders will only pay attention to the report on industrial production in Germany. The country with the world's fourth-largest economy is highly production-oriented, so it's safe to say that with better data, we will see a positive impulse in the short-term trend of DAX.

There will be no significant economic news during the US Session, so traders will focus on government bond yields. Just how much the yield on government securities will still be raised is an open question. There is no way we know, but over the past few days, volumes of widely traded ETFs, such as the iShares 7-10 year Treasury Bond ETF (IEF) and iShares 20+ Year Treasury Bond ETF (TLT), climbed to their highest levels of months . Optional activity is also increased. Not surprising. When risk-free assets such as bonds make a lot of movement, as we have noticed, traders are standing and recording. Another ETF that is worth monitoring is iShares iBoxx Investment Grade Corporate Bond ETF (LQD), a basket of corporate bonds that is at its lowest level since early 2016. As 10-year bond yields are considered a benchmark for global debt, higher values ​​mean that debt repayments for a whole range of companies also increase. In this way they have to spend more to finance their debts.

AUD remains in a bearish trajectory as global debt repayment rates make the Australian particularly vulnerable to downsizing. Data in Australia continues to deteriorate, especially in terms of the housing market. The pounds should continue to rise, although the uncertainty surrounding Brexit remains at the forefront. Government bond yields in the UK continue to grow due to a combination of constructive monetary policy normalization and relatively strong economic data.

Indicative prices for opening European indices today:

DAX: 12,083 - 16 points decrease
UKX: 7,317 - 5 points decrease
CAC: 5.341 - 9 points decrease

Photo: Pixabay.com

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