The Americans and Russians have formulated a landmark agreement on international monitors finding, securing, and destroying chemical weapons in Syria. The accord has been hailed as a success for diplomacy, but at the same time has come under harsh criticism for a tight schedule that most commentators believe is near impossible to achieve. Syria has been given until the end of this week to disclose details of its chemical weapons stockpile. For now the threat of military force from the United States has abated, but if Assad fails to comply, the Americans have made it clear that military strikes are still an option.
A Bloomberg Poll of global investors has indicated that any tapering by the Federal Reserve this week will have little impact on global markets, as most investors have already priced in the event and expect such action from the Federal Reserve. The yield on 10-year Treasury notes had gained to 2.91% at the close of trade last week compared to 2.04% in May this year just before Fed Chairman Bernanke raised the possibility of tapering this year. Since then, emerging markets and their currencies have taken a significant beating.
U.S. equity markets recording their strongest week since January as worse than expected data fuelled speculation that tapering of stimulus from the Fed would not be as aggressive as most expected. The S&P 500 rose 2% over the week after closing 0.3% higher on the final trading session of the week. Many commentators are now calling for a modest tapering in stimulus of about $10 billion. Earlier in Europe, bourse closed the week on a positive note with both the DAX and CAC 40 gaining almost 0.2%.
Commodity prices fell led by strong falls in precious metals with the major indexes losing more than 0.4%. WTI crude suffered losses last week as it appeared that a military strike against Syria would be averted by a last minute diplomatic effort between Russia and the United States. WTI fell 0.4% to $108.20. Precious metals plunged with gold losing 1.7% to $1,309 while silver fell 2% to $21.72 after Goldman Sachs called prices lower. Copper eased 0.2%. Agricultural commodities were mostly lower with grains suffering significant falls on the back of rising inventories of corn.