 Hello and welcome to CMC Markets in this quick look back at 2016 and the potential for future market direction with respect to 2017. I'm going to look at a number of key themes in this particular video. First and foremost I'm going to look back on the performance of equity markets and look at the potential for further gains. Also look at the performance of bond markets which on the face of it could well see further losses and higher yields. And also look at the potential for further euro losses particularly against the dollar towards parity and also have a quick look at the pound against the dollar. So we're going to make a start with the performance of equity markets so far this year. You can see an article I've written on all of the stuff that I'm about to talk about on the news and analysis section of the CMC Markets website. You can see that here in news and analysis there and then you basically go across from left to right on the carousel to look for the articles in question. So talking about bad year for sterling it could get better. UK banks starting to show early signs of a turnaround, mining stocks putting in a bit of a copper bottom and bond yields looking set for a move to the upside. In 2017 but first and foremost let's look at the performance of equity markets because I think after a bit of a rocky start at the beginning of 2016 we have seen a decent rebound in the second part of this year. We can certainly see the Brexit referendum and the sharp moves lower in the aftermath of that. But since then equity markets have been moving slowly towards the upside to the point where we're looking at around about 10% gains for the FTSE 100. The German DAX and the S&P 500 and I think a large part of that rebound is down to the fact that we saw a significant rebound in commodity prices and we can pretty much put the bottom of equity markets in to round about the same sort of time. The oil price is bottomed out at the end of January and the beginning of February round about here on this chart. But also I think what we've also seen with respect to the rebound in equity markets is we've also seen the potential for the further for the first stirrings of a significant rise in inflation repression and I think that's been borne out by the sell-off that we've seen in bond markets since the middle of the summer. And that's no better illustrated than on this 10-year US 10-year Treasury note chart that I've got from going back all the way to 2013. We've broken a very key support level here around about the 2013-2014 lows but more importantly I think if we look at a yield chart and this yield chart is in one of the pieces that I've written on the website we can see that the downtrend line that's been in place since 2007-2008 in terms of yields we've seen a break to the upside which does appear to suggest that we could well see further gains in US bond yields to around about the 3% level the highs that we saw in 2013 and I think given the tone of the recent hawkish rhetoric from the Federal Reserve and Mrs. Yellen's comments to a group of students in Baltimore she remains or she seems a very very enthusiastic about the health of the US labor market and I think if those comments are then carried over into 2017 then the potential for further rate rises in 2017 probably remains higher than it was this time last year when the Fed was talking about the potential for at least four rate rises in 2016 now economic conditions are slightly different now to what when they were 12 months ago 12 months ago there was an awful lot of concern about deflation we don't have that same concern at the moment and I think that makes the likelihood of a potential of the potential for further rate rises that much greater certainly in the context of the charts we've seen a significant break higher in yields and I think in terms of the price action that's significant we didn't see that a year ago we have seen it now and we've not only seen it in US 10 year treasuries but we've also seen it in UK Guilts as well if we can look at UK Guilts we've also seen a significant break to the downside there as well and a move higher in yields to around about one and a half percent and that appears to be a little bit of a line in the sand at the moment we can see that from this particular chart here we go all the way back on UK Guilts and the long-term trend from the 2014 lows in terms of the prices is still towards the upside we need to keep an eye on this key trend line here this key support around about 122 70 123 but ultimately I think if we do break down and inflationary pressure does start to come back to the fore then higher yields are likely to be a significant byproduct of that so what does that mean for currencies were currencies the likelihood is we're going to see a stronger dollar and if we see a stronger dollar that's likely to put downward pressure on the euro and I think again that's going to be particularly significant in the context of this long-term chart for euro dollar here we looked at this long-term chart again this is something that I put on my piece on the website we've broken towards the downside in terms of the euro dollar chart here and that would appear to suggest that we could well test towards the lows or the levels that we last saw at the beginning of the last century towards parity we've broken the lows in 2014 2015 which was around about 104 60 to really I think stabilize in terms of euro dollar if we break that down we need to get back through 105 20 which is which is these levels here these lows here think if we can get back through 105 20 then we could have the potential for a little bit of a stabilization in terms of the euro and that will take the pressure off the downside but there is one other factor that's really I think weighing on the euro dollar at this point in time and it's this chart here which we've got in front of me now if we look at this chart this is basically the differential the yield differential between US 10 year Treasury yields and US Bundy yields and they're at the highest level since the time of the Berlin wall and the Berlin wall coming down so around about here this was where euro dollar made its all-time lows around about 0.82 30 at the beginning of 2000 round about 2000 yield differentials were a lot narrower than they are now and yet euro dollar is much higher so there's a massive disconnect there between what yield differentials are telling us now and what you and where euro dollar is now euro dollar now is currently higher than we when yield differentials were a lot lower and that does suggest to me that potentially euro dollar should work could well have a further downside in it if it's not able to get back above that 105 20 area and obviously that also has significant consequences for the pound against the dollar we've in at the moment we're managing to hold above this series of lows in November around about 1 23 20 there is a worry though that we have broken towards the downside on the daily charts of this trend line that's been in place since the October lows and that potentially could lead us to further sterling weakness towards these twin lows here and this resistance level here so 123 123 20 I think it's going to be a very very key support level what could potentially keep a floor under the pound well I think it could be euro sterling because I think the potential for further euro sterling strength remains fairly limited but having said that we are currently still above a very key support line and a 200 day moving average on the euro sterling chart at around about 82 80 83 so those are the key themes that I'm looking at over the course of the next few months what will bond yields do over the course of the next few months will we see a significant rise in yields our equity markets at current valuations are looking a little bit frothy and are we likely to see further declines in the euro and the pound particularly against the dollar so that's it for this year once again thanks very much for listening make a take may I take this opportunity to wish you all a merry Christmas and a happy new year and I'll see you all next year