Bannockburn: 'If the rumor was bought, the fact has been sold'
Many stock bourses around the world have retreated, and Bannockburn Global Forex says this may be a case of buy-the-rumor and sell-the-fact, meaning markets factor in an expected news event and then move the opposite way once it occurs. Previously, markets bounced sharply from their recent lows on expectations for a deal in the U.S. Senate on fiscal stimulus. After several days of negotiations, the Senate has passed a relief bill unanimously and sent it to the House of Representatives. “If the rumor was bought, the fact has been sold,” Bannockurn said. Tokyo’s Nikkei index lost 4.5%, and the Chinese and Hong Kong markets also slipped, although Australian stocks rose. Meanwhile, European stocks are softer and the futures are pointing to a softer open for the Dow Jones Industrial Average. Bannockburn also noted that benchmark bond yields are softer around the globe.