Morning Call. Market Overview for 13.09.2016

The Big Picture:

Due to the ECB´S expansive monetary policy, this is now possible. For the first time, German consumer goods producer Henkel and French pharmaceutical producer Sanofi, were able to issue zero coupon bonds, with negative yield. It is remarkable to note that investors bought the Sanofi debt and not the shares, which have a dividend yield of 4.19% supported by a solid pharmaceutical business model.This example shows how negative rates can cause anomalies in financial markets. The ECB buys 80 Billion Euros worth of bonds on a monthly basis. This has lead to scarcity in the supply of certain government bonds, in particular German Bunds. Additionally, the ECB is buying corporate bonds. Henkel and Sanofi are just the beginning of corporate bonds with negative yield.

DAX

The DAX is in a downwards trend.

EUR / USD

The Euro is trading sideways in a large trend. Support is at 1,0822, resistance at 1,1429. Short term the Euro is in a upward trend.

USD / JPY

The USD is in a downward trend against the Yen. Major support is at 100 on a closing basis.

Gold

Gold mid term, is trending upwards.The next major resistance is at 1375, support at 1300.

WTI Oil

Oil is in a downward trend.

Overnight:

Equities are on a rollercoaster. After week US markets, European stocks started trading on low levels, retracing their losses during the day. The DAX closed down 1.34%, the main reason being positive US markets. The S&P opened on the days lows, closing up 1.47%. The main reason for the up move being the head of the Atlanta Fed. Dennis Lockhart, is of the opinion that the current economic environment its not supportive of a rise in interest rates. This gave markets hope in respect to further Fed policy. Asian markets only recuperated slightly. The USD is unchanged. WTI Oil drops 0.86% and Gold rises 0.14%.

Today´s numbers (CET):

• 08:00 Germany: Consumer Prices
• 10:00 Germany: ZEW Economic Sentiment

Corporate news:

• USA: Quarterly Earnings: No data expected