NEW YORK--(BUSINESS WIRE)--Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own, Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (NYSE:WFC). This week, Gordon turns his attention to last week’s influential global economic data.
There was a spike in volatility, which investors’ who found themselves on the wrong side of the re-pricings, were not too thrilled about. The concern is whether the risk off trade over the past few weeks is a result of a mid-summer slump, or just the beginning of more re-pricings. Wells Fargo analysts’ believe it to be a temporary cease in risk taking.
Geopolitical events last week did not have a positive impact on high beta risk assets. For starters, Argentina officially defaulted on an interest payment, making this the fourth default for them in 32 years. Secondly, a major Portuguese bank gave some indication of heightened stress. Also, the EU moved closer to imposing meaningful sanctions against Russia for the role they played in the strike on the civilian jet liner. Wells Fargo analysts’ believe sanctions would induce a decrease in both Europe’s and Russia’s GDP during the later quarters of 2014. Finally, the cease-fire between Israel and Hamas was unsuccessful. The conflict has been governing news coverage and leaves a negative impression on collective crowd psychology.
Since all of these events seemed to happen all at once, some investors began to take precautions. The S&P had a consistent bull run since the beginning of February, but it appears to have finally taken a turn. The VIX Index rose by almost 400 basis points last week, which was its second largest increase of the year. Wells Fargo analysts’ are surprised to see that interest rate volatility actually dropped; with all of the financial instability on the table.
To hear a more in depth explanation of the turning economic balance, please tune into Wells Fargo’s latest video.
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