DXY is back.
AUD is sitting on big support.
CNY serene.
Gold no bueno.
AI metals likewise.
Miners fade.
EM too.
Junk sitting on big support, too.
Yields down a smidge.
Stocks no bueno.
There was not much overnight to explain the strong DXY, other than traditional risk off.
That the failure of risk sentiment is being driven by widening junk spreads in the US and, in turn, hyperscaler bonds, matters. It is still largely an Oracle issues but Amazon joined in last night with a huge issuance.
There is also the ongoing stress in the repo market from the government shutdown, though that should ease quickly in the days ahead as the government stops accumulating cash and issues more debt instead.
Any time credit leads a broader move in forex and stocks, it is far more dangerous than other forms of drawdown because it is much more likely to trigger a DXY bid. That is what we have.
AUD in the gun for now.
