"A positive start in Europe comes off the back of a similarly upbeat Asian session. This comes in part thanks to a relatively orderly Japanese 10-year bond auction, with strong demand driving yields lower after a period that has seen borrowing costs soar across the curve. Notably, this has gone hand in hand with a pullback in precious metals, highlighting the positive correlation evident between Japanese yields and gold."
"If precious metal bulls are to use Japanese bond yields as a guide on future price action for gold and silver, they will undoubtedly be confident that any relief for Japanese bonds will likely be a short-term phenomenon as we move towards a period that markets currently price as a 64% chance of a rate cut at either the December or January BoJ meetings."
"On the European-front, the gains seen for the wider indices belie the mixed experience under the hood, with the financials largely providing the one area of strength across the board. This comes after an upbeat report from JP Morgan analysts who predict continued strength for European banking stocks into 2026, with stable macro conditions, and impressive capital generation helping further extend the valuation re-rating for the sector."
"The mixed trade seen for European manufacturers comes amid claims that the supply of rare earth materials has been strained thanks to a US clamour for any Chinese exports amid ongoing licensing issues. Reuters have noted that at least three Chinese rare earth exporters have now managed to get their hands on export licenses, enabling increased trade of these key materials after a US-China agreement."
Strong demand at a Japanese 10-year bond auction pushed yields lower after a period of rising borrowing costs across the curve. The yield decline coincided with a pullback in precious metals, reflecting a positive correlation between Japanese yields and gold. Markets price a roughly 64% chance of a BoJ rate cut in December or January, suggesting potential short-term relief for Japanese bonds. European indices gained overall, led by financials after JP Morgan predicted continued strength for European banking stocks into 2026 despite ECB cuts to 2.15%. Rare earth exports from China remain constrained, though some exporters obtained licenses allowing increased trade.
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]