Stock markets sold off across Asia, after a weaker close on Wall Street. Rate hike concerns picked up again in the wake of the hotter than expected US inflation print yesterday and still tight jobless claims numbers and put stocks on the back foot. The reports saw the market price back in risk of another Fed rate hike this year of about 38%, though the probability was briefly as high as 50-50. The data, the threat of another Fed hike, and geopolitical risks soured investor sentiment.
European futures are also in the red, while US futures show signs of stabilisation. The 10-year Treasury yield is down -3.3 bp at 4.664%, as the curve shifts lower. In the Eurozone, the short end is outperforming, but the 10-year Bund yield is also down -1.0 bp at 2.71%, while spreads are coming in.
- USDIndex has moved off the highs seen in the wake of yesterday’s data and is at 106.20. USDJPY is hovering below 150 as the yield gap with the US widened on hotter-than-expected inflation data.
- Yields: Yields cheapened further on the back of the poorly subscribed bond auction. The bearish action in Treasuries has given an excuse to take profits. Treasury yields rose to their highest levels of the week.
- Stocks: Wall Street slipped and closed with a -0.63% drop on the US100, -0.62% on the US500, and -0.51% on the US30.
- UKOIL is set for a weekly gain of over 2%, while USOIL is set to climb about 1% for the week as investors keep an eye on the Middle Eastern exports due to the Gaza crisis. USOIL up to $83.70.
Today: ECB President Lagarde, FOMC Member Harker & BOE Gov Bailey speak.
Interesting Mover: US500 (-0.62%) reversed in the upper part of the trend channel, touching both the 50- and the 100- DMA, which have bearishly crossed, indicating a return to 4100 lows.
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Andria Pichidi
Market Analyst
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