Manuel Oliveri

Risk aversion is broadly on the rise and that has been triggered by the weakness in U.S. manufacturing ISM data earlier this week, the outperformance of the U.S. economy compared to other major economies has held the dollar and other risky assets up but that has changed this week.

Some of the recent events have been favorable for Britain to remain in the EU, but it's still too close to call, we are advising our clients to go neutral into the vote, although we remain constructive. If.

There may be rising scope of the BOJ (Bank of Japan) considering a more aggressive policy stance later on, it must still be kept in mind that inflation expectations as measured by five-year inflation swaps remain close to multi-year lows and that Governor (Haruhiko) Kuroda appears to make a bigger case of additional measures being considered should it prove necessary.

There is some caution ruling markets as we have seen with the reaction to stock markets. Ultimately, the Fed/ECB divergence will be the focus, with markets already pricing in a 10 basis point deposit rate cut by the ECB and extension of the QE programme.

There is a little bit of better sentiment towards Greece after we saw some reports yesterday of a deal, even if there is no confirmation, it shows to the market that some progress is being made.