Macro morning

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Macro Re-cap
With the Fed Reserve taking away the punchbowl on further stimulus, and no further cuts to interest rates from the ECB overnight, markets were spooked by the very poor Spanish bond results. The auction – in an “extremely difficult” time according to Spanish PM Rajoy, was not very successful, getting just over the minimum bids and yields shooting up from 3.3% to 4.3% back to pre-LTRO levels.

The slew of services PMI data didn’t help matters either, with Italy still in a slump at 44.3, France flat at 50.1, Germany seeing no rise at 52.1 and the EZ as a whole still contracting at 49.2 points, alongside retail sales which dipped 0.1% month/month.

In the States, a good private payrolls print didn’t stop the selloff in financial stocks, as the ISM non-manufacturing index fell slightly to 56 points.

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Markets Update
As always, the bond markets spooked currency and equities, with the latter down over 2% across Europe and over 1% in the US. Risk proxies like the AUD have been sold off, with spot gold smashed. Here’s the summary:

See charts of all major markets at bottom of post. 

Bonds:

  • US 10 year Treasury yields fell 7 pips to 2.22% on a flight to “safety”
  • German 10 year bunds also strengthened, losing 2 pips to 1.79%
  • Australian 10 year government bonds were sold off, gaining 2 pips to 4.08%.

Currencies:

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  • King USD continues to climb, the dollar index rising nearly 1% again to 79.77 points
  • Euro tumbled from 1.334 to 1.313 :
  • AUD continued its downward trajectory, falling below 1.03 against the USD where it remains at the start of Asian trading.

Equities:

  • The broader Euro Stoxx 50 slumped to a 3 month low, down 2.5% at 2398 points
  • The FTSE 100 fell 2.3% to 5703, just on support levels
  • German DAX slumped 2.8% to be well below the important 7000 point barrier at 6784 points
  • US stocks fell, led by financials and IT with the S&P 500 closing 1% lower at 1398, the Dow Jones Industrial Average down 1% to 13074
  • Apple (AAPL) barely slipped – only down 0.8% or $5 to $624 a share

Commodities:

  • Oil prices fell again, with higher crude inventories (largest gain since 2011) putting on pressure, with ICE Brent futures falling $2.52 a barrel to $122.65 per barrel – but still stable at this price level:
  • Gold (USD) had another horror night falling over $50USD an ounce or 3%, falling as low a $1611 before recovering to $1620USD an ounce, whilst copper lost over 2% and silver was smashed, down 6% as we wait the start of the Asian session.

Today in Asia

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  • As Asia wakes up to the news, the ASX200 futures are pointing to a much lower open – down around 40 points or 1% to just under 4300 points.
  • Data is sparse locally today, whilst tonight sees another deluge of European and US data. Click here for our economic calendar.

Market Charts

AUD_USD
EUR_USD
US DOLLAR INDEX
GOLD USD
S&P500
VIX VOLATILITY
DAX 30
SPOT BRENT CRUDE
RJ/CRB COMMODITY INDEX
CHINA IMPORT IRON ORE

Sovereign 10 year bond yields

UK
USA
JAPAN
GREECE
IRELAND
SPAIN
ITALY
FRANCE
GERMANY
PORTUGAL
AUSTRALIA


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