Kinsale Trading examines how Fed tapering expectations, currency volatility, and emerging market stress combined to drive equity markets in June 2013. It argues stocks were increasingly reacting to moves in bonds and currencies, while highlighting emerging market debt as a critical risk investors should closely monitor.
7:00’s Report
Kinsale Trading
Tom Essaye
Research
6 Pages
Key Takeaways
Emerging Market Stress: Emerging market debt had fallen sharply since May, while the Brazilian real and South African rand dropped to 4 year lows, increasing pressure across global risk assets.
Critical Support Level: The paper identifies 1,600 as key S&P 500 support, arguing there was little reason to materially reduce equity exposure unless that level was broken.
Japan Policy Impact: The Bank of Japan maintained its 2% inflation target, reinforcing the view that a weaker yen remained necessary despite short term volatility and crowded positioning.
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