How a Stable Bond Market Guides Investors

Market Commentary

Based on our latest observations, the market last week saw some mixed performance. The outperformers were STOXX50, NDX, and WTI, which had returns of 0.84, 0.64, and 0.55 respectively. On the other hand, the underperformers were HSI, Silver, and JPY, with returns of -3.36, -2.58, and -2.48. This reflects a mix of market dynamics and suggests some positive and negative trends.

In terms of treasury yields, there has been a slight increase compared to the previous week, but the difference in yields is relatively small. This indicates relatively stable market conditions in the bond market.

Looking at the risk/reward ratio, NDX has the highest ratio of 2.76, followed by SPX with a ratio of 1.73 and NK225 with a ratio of 1.72. On the other hand, HSI has the lowest ratio of -1.09, followed by CSI300 with a ratio of -1.11 and JPY with a ratio of -0.91.

In terms of correlation, securities with the lowest average correlation with all other assets include Brent (0.21), WTI (0.22), Gold (0.21), Silver (0.23), ASX200 (0.24), NK225 (0.29), and STI (0.26). These securities provide potential diversification benefits and may help reduce portfolio volatility.

In global news, Apple was found guilty of deliberately slowing down iPhones, LG unveiled a transparent OLED TV, and NVIDIA launched new chips for AI. TCL showcased a 115-inch MiniLED Quantum Dot TV and introduced their NXTPAPER display technology. Bank of America faced a non-cash charge related to the transition away from the BSBY index. Internationally, a senior Hezbollah commander was killed in an Israeli airstrike, and the Pope called for a global ban on surrogacy. There were also updates on the Post Office scandal, housing market confidence, and the ongoing conflict between Israel and Hamas.

Looking ahead, some of the upcoming economic data for next week that should be watched closely include Wholesale Inventories MoM, EIA Crude Oil Stocks Change, CPI, and the Monthly Budget Statement. These data releases have the potential to cause market volatility, and any surprises towards the upside or downside should be monitored closely.

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