Today looks like bringing some much needed relief for shareholders.
Weekend comments by the People’s Bank are nicely timed from a market point of view. The PBOC comments will reduce concerns about the Yuan being depreciated in the near future and will support the relief already created by Friday’s strong gain in oil and US stocks.
It remains to be seen whether the Yuan will ultimately depreciate. However, it’s clear from the PBOC’s weekend comments that it’s not going to happen in the near future. This will help defuse concerns about the disruptive impact of a one-off Yuan depreciation putting this issue on the back burner from a market perspective.
Deutsche Bank’s decision to buy back debt will also help investor confidence. The bank will ultimately need to improve earnings to cover debt obligations over the long run. However, the fact that Deutsche has sufficient short term liquidity to take advantage of the current sell off in their bonds helps allay concerns about any problems in the short to medium term.
Friday’s rally in oil is symptomatic of volatile, skittish markets. While traders are concerned about the possibility of an ongoing bear market in oil, they are also nervous about how far it could rally in response to good news. This appears to be behind oil’s defensive price jump in response to as yet unsubstantiated theories about OPEC production cuts.