Risk sentiment soured on bond markets on Friday night as the latest US ISM manufacturing survey dropped to a two year low. While Wall Street bounced back nearly 1%, European stocks struggled as the whole risk complex is still contending with recession fears in the wake of central banks trying to combat inflation with more rate rises. The USD lifted slightly, albeit through some volatility with with Euro pushed down to a two week low, while the Australian dollar was slammed below the 68 handle for a new monthly low. Bond markets had all the action with a big retracement in yields, with 10 year Treasuries pulled well below the 3% level to 2.8% before recovering to 2.9% as interest rate futures moderated once again, with “only” 170 bps suggested rate rises by the Fed this year. Commodity prices were also mixed, with oil prices up more than 2%, iron ore off by more than 3% while gold continued to deflate, briefly crossing below the $1800USD per ounce level before recovering.
Bitcoin remains completely depressed here at the $19K level, having dropped from $21K at the start of the week. The overall technical picture is very bearish, watch the $19K level closely for a further breakdown:
Looking at share markets in Asia from Friday’s session, where mainland Chinese share markets slipped going into the close with the Shanghai Composite down nearly 0.3% to 3387 points while the Hang Seng Index sold off twice as fast, down 0.6% to close at 21859 points. The daily chart was showing an attempt to breakout above the previous highs at the 22000 point level but as I warned previously, those overhead tails on the previous daily candles that matched the previous false breakout top were indicating a lot of intrasession resistance. Momentum continues to rollover here, so be cautious of low volatility that could beget higher downside volatility soon:
