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, Rich Gordon discusses the economic news in Europe, as the Eurozone economy stagnated in the second quarter.
In second quarter GDP growth was close to zero and the Euro of the year growth rate fell to .7%. Rich Gordon points out that Germany has been the reliable Eurozone growth engine, this is troubling because its growth rate fell to 1.2% in the second quarter. With everything that is happening in Europe, Gordon says there has been a strengthening in the U.S. dollar. As the dollar increases in value, commodities typically lose value, over the summer we have witnessed the dollar trading higher and commodities prices moving lower.
This was a week of mixed messages as the better political climate got canceled out by the weak economic data out of Euro. Gordon states that the return of stability has brought risk buyers back to the market, which resulted in High Yield Index dropping 3.5 points in July and the price drop brought in institutional buyers.
Gordon points out that there are not enough high quality bonds to meet investor demand, but many economist insist that yields should be higher. However, this is not supported by the 10-Year German Bund Chart which shows that the German Bund is at one percent, which means the Europe’s strongest economy is performing below what is expected, meaning the weakest economies are very vulnerable. The strong performance in German bonds affects the U.S. 10-Year Treasury Yield, last week it was at 2.40 and going as low as 2.30 before some sellers emerged. Gordon states that in 2014 each dip found buyers and that pattern will continue.
To hear a more in depth explanation of recent trading patterns, and what other effects the late economic data may have, please tune into Wells Fargo Securities’ latest video.
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