It’s risk off again. The US dollar eased:
Largely on a strong JPY:
Commodity currencies were mixed:
Gold was firm:
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Oil too:
Not so base metals:
Miners fell:
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US and EM high yield was weak despite oil:
US bond were bid:
The Japanese bond curve flattened, the opposite of BoJ intentions:
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The S&P500 was hit:
It’s not one thing, its everything:
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- markets continue to ignore the the Bank of Japan’s objectives and buy yen. I still think NIRP is being underestimated but that’s not how markets are playing it;
- the US election is weighing on everything as it proves closer than many expected. Tonight is the first debate, and
- Deutsche Bank is sinking in Europe underlining the precariousness of Eurozone politics given Germany is now caught between its role as financial disciplinarian and a banking crisis at home.
As I said last week, if you want to play the Black Swan gauntlet of the next few quarters – including the Fed, BoJ, ECB, EZ elections, US election and weak oil – then gold is your option.