Central banks expected to assist risk asset performance

According to market commentary released by Foresters Financial, risk assets may be seeing better days ahead

Everything’s a matter of perspective. While the overarching theme in news and commentary over recent weeks has been one of uncertainty, a recent market commentary from Foresters Financial forecasts good performance for risk assets.

Published on July 12 on the company site, the daily market commentary piece reports that equities have been doing well, and several upcoming announcements are expected to keep spirits up.

“Asian markets were higher as the prospects of economic support from Japan increased. Earnings season begins this week, and so far Daimler has reported a significant beat with EBIT rising 5.6% year-over-year… Thursday we get Bank of England’s monetary policy decision. We are expecting a cut of 25bps and verbiage around more bond buying. We suspect the Bank of England will do a combination of a 50bps cut for July and August,” the commentary states.

Positive moves are also expected from other central banks. In the case of the European Central Bank, modifications to the Bundt buying program are expected. “Currently they are buying mostly at the front end of the yield curve but we anticipate more buying in other parts of the curve.” As for the Bank of Canada’s monetary policy announcement, dovish comments were expected.

“The global theme continues to be a more accommodative stance with rates lower for longer. We expect credit to be better supported in this environment barring any exogenous events. Sovereign bond yields are perceived to have reached such low levels that the risk of a snap back is starting to gain traction.”

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