Don't expect fireworks in the markets today

The Day So Far

Characteristically quiet markets ahead of one of the most eagerly anticipated Fed meetings this year, culminating with a press conference on Thursday evening. Range-bound across the board thus far, on the back of a mostly negative Asian session, with the Shanghai Composite recovering a touch from -4% to close in the red by 2.67%. The big story over the weekend, aside from the uncoordinated response by European leaders to the refugee crisis, was the nomination of 66 year old left-wing candidate Jeremy Corbyn to the Labour leadership for the next election. His literally left-field policies has captured the imagination of many Labour supporters and it will be interesting to see whether he reins in some of these ideas in order to appeal to the centre. Also, this morning sterling appreciated significantly, testing the month’s high following hawkish comments from MPC member Weale.

The Afternoon View

Not expecting any great fireworks from the markets this afternoon with the calendar so bare and bigger events to come later on in the week. It certainly is shaping up to be the ‘dud’ day in an exciting week, and traders advised to keep their profit expectations light and conserve capital for the opportunities likely to present themselves later in the week.

We are sticking with our short bias in equities and a long in the euro, respecting the strong inverse correlation between euro strength and equities weakness, particularly European equities. We like conservative shorts in T notes and WTI crude.