Buying heat in the financial markets continues. But the risks have not completely disappeared

Recently, traders have been looking for more intricate and therefore risky securities. The stability of the world’s largest economies is not waning. So far, the financial market is still good at first.

The good mood on the market did not end last week either. The sell-off in stock indices at the end of the year is definitely forgotten, and only in the US have they reached the level they reached before the collapse of Lehman Brothers’ 2008 investment, which became an unofficial arrest of the financial crisis. Last week alone, the US stock index S & P500 posted one percent and since the end of the year it has appreciated by 5.65 percent.

The main reason behind the growth of optimism in the markets was the continuing influx of good at first from the USA and Europe. This was further confirmed by the fact that the stabilization of the world’s largest economies has not slowed down yet, which contributes to the desire of traders to look for indebted and therefore risky securities, such as the first stock.

This is especially true of the US economy, its growth is a key for Europe and Asia, which are still very much on American demand. Therefore, the first was the positive impact on the markets of the surprisingly good results of activity in the US manufacturing sector, which is currently undergoing the strongest expansion in the last five years. Although the knowledge of the growth of production, it has a low level from previous months. However, such good results surprised the market.

In addition, the weakness of the American population has a beneficial effect on the rest of the country. The weak pound and strong foreign demand have led the UK manufacturing sector to perform best in recent years. The growth of new orders will help to improve the mood of companies in Germany, which was the last time in July 2008. Asia is not far behind either.

The revival in the USA and the good growth of the economy also start to benefit Japanese – strongly export-oriented – companies, according to which the conditions for doing business are now as good as going before the financial crisis. Therefore, optimistic equivalents take advantage not only among the traders themselves, but especially among companies.
Even with a few positive signals about the elderly, the bag still cannot effectively reduce the unemployment rate. In the United States, for example, it has remained unchanged at 9.7 percent, and its main element is the market after the Achilles heel of the US economy.

Therefore, even at the end of April, it cannot be said with certainty that the current positive trend should continue in the coming months. The better state of production is partly due to its low level from last year, which led to a rapid emptying of the warehouse. The creation of new ways, when production in the USA is growing at a slow rate than sales, now makes a significant contribution to the ongoing expansion. This will lead to its renewed attenuation in the future, especially if it is not possible to reduce the high unemployment rate.

In addition, the knowledge of risks arises from the expected fiscal stimulus stimulating the economy and the application of entry strategies of individual central banks. In the meantime, they still keep rates at record levels, thanks to which we have lost liquidity in the markets under the support of rising financial asset prices. At the end of the year, however, the effects of removing fiscal and monetary crutches could be more noticeable in the financial markets. As soon as the transfer of liquidity takes place at a cheap level of companies, households and, above all, the bustle of recent months and the well-known good mood, we can catch our breath very quickly.

If this scene cannot be taken to light weight, traders were convinced on the Czech lands this week. In this case, it was not possible to sell bonds worth one billion euros, which led to a renewed increase in the risks of premiums on Czech government bonds. With the gradual withdrawal of liquidity, similar problems may increase and at the same time the high supply of government bonds on the market may not be limited to the Czechs.

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