Technical & Fundamental Oil Reports Specialists

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The Bogeyman defeated?

Published Monday, May 11th, 2015

A nervous week for markets was steadied on Friday by a Conservative Party victory in the UK, by non-farm payroll data in the US that met expectations and by a significant retreat in oil prices from the highs of the week. Government safe haven bonds are not supposed to be volatile but they were last week brought on by an ‘inflation’ tantrum as the deflation bogeyman that has been stalking and driving markets lost its grip. The cloud of Grexit still hovers and it will be headline making news again this week but it was temporarily set aside on Friday.

We came in on Friday morning to find that the Tory party had trounced all of the opposition except the SNP. In the afternoon we learnt that US non-farm payrolls had increased by 223,000 in April, that unemployment had fallen to 5.4% and that the average wage increase was very modest. The only negative news was that the March figure was revised down to 85,000, but on balance it was good enough to lift immediate worries about US growth but not good enough to bring forward an interest rate rise.

By the close the FTSE was up 2.3%, the S&P 1.4% and the Eurofirst 300 2.8%. Poor Chinese trade data on exports and imports added to expectations of more stimulus measures to come in the form of a cut in interest rates or reserve ratios or both. They arrived over the weekend in the form of an interest rate cut over 0.25% to 5.1%, the third cut in three months.

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Posted by David Hufton