Brexit, inversion of yield curve, new sanctions against Russia

1 avr. 2019

Last week ended with the “accompaniment” of the UK news. Theresa May was still able to vote on her plan to leave the EU. However, it would be better if she did not do this, since she suffered a third defeat. In theory, this should have been the final vote.

Since the UK was unable to reach an agreement last week, the postponement of Brexit until May 22 is not granted. Sum up the country must either leave the EU on April 12 or request another delay. In case of a delay, it is necessary to participate in the European parliamentary elections on May 23. Meanwhile, The European Union is scheduled for an emergency summit on April 10.

On Sunday, the British Prime Minister announced that she would again put her version of the agreement to a vote. This will be the fourth time (!). At the same time, she gave a none-too-subtle hint that if the deputies do not vote “for”, then early parliamentary elections will be called. This week might not be easy to the pound.

Last week, the pound was naturally under pressure. However, in our opinion, the situation continues to evolve as it has been doing recently. There is an absolutely conscious inhibition of the process. Obviously, the UK will ask for a reprieve, and the EU will provide it. Our position is unchanged - the descents of the pound, we continue to use for his purchases and earnings.

There's a lot of chatter about the inversion of the yield curve among the analysts recently. Last week, the yield on two-year US Treasury bonds was equal to the yield on 10-year. This is a rather atypical phenomenon, often a sign of a future recession in the economy. So concern is growing. Against this background, we continue to believe that buying gold on the intraday basis and in the medium term is a good trading idea.

About our trading ideas. Our recommendation on sales of the Russian ruble was just fine on Friday. We have repeatedly noted that the strengthening of the ruble is temporary, because it does not have “the ground”, and the ruble itself is vulnerable. It was confirmed clearly on Friday. New information on US sanctions brought down the ruble.

We are talking about the second set of sanctions related to the Skripal case. According to Bloomberg, the sanctions include measures against the Russian banking sector.

There is no chance to relax this week. A lot of static information led by statistics on the US labor market on Friday. Brexit news, new sanctions against Russia will not allow to relax. We will inform our readers about the biggest events.