Yesterday saw US retail sales figure shrink by the most in a decade. This caught many by surprise. Is this a one-off data, or the start of a new trend? Nobody was sure. Coupled with no progress on the Sino-US tariffs negotiation, the national emergency threat, and Brexit, investors turned decidedly ‘risk off’. In the States, the 10-year government bond yield dropped to retest its recent lows (see Featured Chart). I highlighted its bearish trend recently (here).
In the UK, the 10-year gilt yield is too under pressure. The yield has fallen from its October peaks at 1.7% to the current 1.1%. This means that investors are buying lots of gilts recently due to the stock market correction (safe haven rush).
Interestingly, this pushed the Long-Gilt ETF (GLTL, 15-years maturity) to the brink of an upside breakout. Whether it can break out this time remains questionable but its trend is unmistakably bullish. Any further Brexit uncertainties could push it beyond the 66-67 resistance band.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.