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One eye open

Today's news headlines: 

‘China property sector woes deepen as midsize developer defaults’. The Evergrande crisis has certainly turned the heads of investors, with many worried about the potential for a large-scale default to spill over into other areas in the economy. Fantasia Holdings, a medium-sized property developer, defaulted on a $206m bond, which matured on Monday after assuring investors a week earlier that it was in a comfortable position to pay down its obligations. This highlights the highly leveraged nature of the property sector in China, which accounts for around 15% of the country’s GDP. This is not a new issue as Fortune Land Development, another property developer, defaulted on one of its offshore bonds back in February. Markets are in wait-and-see mode for now as Evergrande scrambles to make payments by selling off areas of the business. (Financial Times) 

‘Government watchdog launches probe into trading by Fed officials’. A review has been launched into whether trades conducted last year by members of the Federal Reserve complied with the law amid speculation of insider trading. While the Fed was deploying capital to shore up financial markets last year, two top officials were thought to be actively trading at this time. Eric Rosengren, Robert Kaplan and Richard Clarida have all come under scrutiny. Clarida has been found rebalancing his portfolio just days before the Fed announced a cut in interest rates; he moved between $1m and $5m out of bonds and into stocks. Although ethics officials have stated this was part of a pre-arranged rebalancing of the portfolio. (Financial Times)


The S&P 500 fell 1.30% yesterday as a six-hour outage on Facebook's platforms dragged the stocks’ share price 4.9% lower, weighing on the blue-chip index. WTI Crude jumped to $78 yesterday, its highest level for seven years as OPEC planned to keep production stable. Cable is back trading around the $1.36 handle this morning while GBP/EUR continues to punch higher above €1.17.  


Japan Tokyo Core CPI y/y: 0.1% vs 0.0% last month
Australia RBA Interest Rate: 0.10% vs 0.10% last month
Eurozone PPI m/m: 10:00AM
US ISM Services PMI: 3:00PM
ECB President Christine Lagarde Speaks: 4:00PM
FOMC Member Randal Quarles Speaks: 6:15PM
Eurozone ECOFIN meetings: All day

Interbank rates:

GBP/USD – 1.3596
GBP/EUR – 1.1723
EUR/USD – 1.1597
USD/CAD – 1.2618

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.