As turmoil continues to spread across global markets, this chart is skyrocketing and it spells big trouble for world markets.
Germany Clings To Negative Interest Rates As European Banks In Trouble
November 20 (King World News) – Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness: Energy drove a 3.3% y/o/y increase in German PPI in October. Ex energy it was up just 1.6%. Keep in mind that Germany still has negative interest rates out 7 years. It will be most likely that the ECB goes into the next economic contraction/downturn with rates still negative. Good luck relying on them for help.
Speaking of which, I’ve highlighted the plight of European banks all year and their damaged profitability. Today the Euro STOXX bank stock index is approaching a key level, that being the lowest level in two years. Today its down by 1.3% and lower for the 7th day in the past 9.
Major Trouble Brewing For European Bank Stocks
Yesterday I highlighted US high yield. This is a chart of the yield of European high yield. One year ago it was an amazingly microscopic level of 1.90%. Yesterday the yield was 4.30%, up 15 bps in one day.
DANGER SIGNAL: European High Yield Skyrocketing
US Dollar
I mentioned last week that the US dollar’s performance this year was pretty bifurcated…
After a run of strength this year against emerging markets, when that ended, it traded better against the developed currencies in the DXY. EM currencies now continue to trade better with the Indian rupee in particular today at the best level since early September after the RBI and the government came to a truce on how to use some of RBI’s excess capital. I continue to like EM local currency sovereign bonds. Many EM countries have more dollar based reserves than dollar denominated debt and much of the EM dollar debt is on the corporate side.
Stay with sovereigns.
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