- Gold up $7 to $1953
- US 10-year yields up 6.7 bps to 2.78%
- WTI crude oil down $3.70 to $94.57
- S&P 500 down 73 points to 4414
- CHF leads, JPY lags
It was an ugly day for US equities today as negativity turned into a rout late in the day. The trigger came much earlier as China covid cases continued to mount on the weekend and market participants questioned the sustainability of lockouts as images of food riots circulated.
That sentiment hit oil at the open but stocks initially weathered the stock. I might have expected some yen buying as the mood soured but it never materialized in a meaningful way. An early rise in Treasury yields and European counterparts pushed everything up against the yen. Even as the front end came back, there was little in the way of a reversal as USD/JPY finishes at 125.44 from a high of 125.77. Trading was generally sideways in New York after a rise in early trade.
EUR/USD rose early on bunds breaking the 2018 high mater mark (in yield) but the gains didn’t last and the pair fell 40 pips from the highs to finish unchanged.
Cable held above 1.3000 as bids just under 1.3020 repeatedly held up in Europe and New York. Watch that level and the big figure in the day ahead for another potential flush. The bids since Friday’s dip below that level haven’t exactly been inspiring.
Commodity currencies were under pressure all day. They tried to stage an afternoon rally but that was stamped out by late selling in stocks with both AUD and CAD finishing 0.5% lower and NZD doing slightly better.
With US CPI tomorrow and all eyes on China, the risks are easy to spot.