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Where do we go from here?

29 November, 2012   |   No comments   |   Written by Andy Aeschbach

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Where do we go from here? Looks like we will be blown over THE cliff. If it’s not the eurozone crisis, it’s the fiscal cliff debate, which remains the major issue. Equities disliked what anticipation wants to tell us but overall, markets continue head to “no mans land” in a hurry.

Concerns about a lack of progress has made sentiment towards risky assets increasingly cautious throughout most of the day, reassuring comments by Mr. Speaker of the House Boehner that he is an “optimist” about budget talks with the president’s assistance to level early losses.

The day before, it was Mr. Senate majority leader Reid who stated that “little progress” was being made and we are now only 35 days from falling over the edge?! According to Reid, it would appear to be high time to shift from “happy talk” to “specific things”. Mr. Bowles thinks the probabilities of a deal is 1/3, 1/3, 1/3 for a deal this year, next year and no deal. Stay tuned and get used to some volatility, this is not over.

Don’t forget: ‘No man’s life, liberty, or property is safe, while congress is in session´ – Mark Twain was quoted saying. Equities traded sideways while government bond yields declined, especially in the periphery. German 10yr bunds were 7bp lower at 1.37% with Italian 10yr yields falling twice as much (4.58%) and Spanish 10yr bonds even dropping 19bp to 5.30%. In high grade trading, issues drifted gradually wider on the back of re-intensifying concerns about the fiscal cliff in the US.

Unlike in previous days, core-based names were not immune to the softening with most bonds quoted wider. Nevertheless, investors also picked up longer-dated utilities and telecom papers. Predominantly new issues (as many times mentioned, this is my strategy for making “quick bucks”).

Be fortunate and follow your instinct or listen to a good advisor – either or!!! Best regards, Andy.

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