Risk Is Back on the Menu

“t doesn’t take a genius to note that the risk-off trades that flooded the markets after China unexpectedly hiked rates Tuesday have already been unwound.

In the immediate aftermath of the People’s Bank of China’s 0.25 percentage point increase in both its one-year lending and deposit rates, investors sold anything that is oxygenated by global growth.

Commodities sank, with gold racking up a $40 decline, the Australian dollar–which only last week hit parity–slid below $0.97 and global equity markets fell sharply. However, less than 24 hours later all the above are once again in demand.”

(Source: Risk Is Back on the Menu – The Source – WSJ)

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