G10/Global: Caution into year-end - Nomura

Despite yesterday’s bounce in equity markets, it is too early to say if the recent wobbles in risk assets have passed, according to analysts at Nomura.

Key Quotes

“As year-end approaches we see three factors that could stay in the front of investors' minds: (1) markets appear worried about another wave of Fed hikes; (2) growth surprises and most PMIs are close to their highs, but China looks to be slowing; and (3) there are a number of events coming up. Because of these factors we would look for the yen to perform well, commodity currencies, such as the AUD and NZD, to underperform and core rates to rally. In terms of volatility, the market that is lagging the move higher in risk premia appears to be FX volatility, which would therefore suggest buying FX volatility is most attractive.”