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The risk sentiment has been positive this morning as we've seen the US dollar pulling back, stock markets rising and Treasury yields falling. The culprit might have been an easing in oil prices, with WTI oil currently down 2.56% on the day, although there was no catalyst for the move. The fact that there hasn't been any direct confrontation between the US and Iran since the UN General Assembly has been supporting the risk sentiment.
We've also seen further narrowing in the OAT-Bund spread this morning after the widening peaked on Friday at the highest levels since the European debt crisis. Some of the improvement might have been triggered by position squaring given the overstretched levels, but the French government has also unveiled plans to sharply narrow the budget deficit by restraining spending and raising tax revenues. The bond market scare has forced policymakers to change course on policy, which could precede a major reversal.
This article was written by Giuseppe Dellamotta at investinglive.com.
Source: Investing Live - News