Stocks Hit Again as Yields Surge – Nasdaq Down 1.8%
US Stocks were hit, treasury yields surged, and Middle East tensions continued to simmer during the trading day yesterday and investors are preparing for more volatile conditions ahead. US Retail Sales smashed expectations overnight with the Core number printing at +1.1%, well above the expected 0.5% leading to more corrective moves. The Nasdaq again took the brunt of the pain, dropping 1.79%, followed by the S&P and Dow Jones which fell 1.20% and 0.65% respectively. US treasury yields jumped higher with the benchmark 10-year gaining 12.9 basis points to hit 4.628%, its highest level since November and the dollar pushed further north. Oil prices dropped without any further escalation in the Middle East, Brent losing 0.39% and WTI falling 0.29% and gold drove higher again, notching up 1.8% on the day to close around the $2,385 per ounce level.
Yen Continues to Weaken with No Official Action… Yet!
The Yen hit its weakest level against the dollar yesterday since 1990 as strong US Retail Sales numbers took the greenback higher against most of the majors. Traders have been keenly watching the pair as the Yen continues to drop and Japanese officials keep warning of potential intervention. The 152.00 level was originally seen as a bit of a line in the sand, but that broke nicely, and they have let the move continue with some investors now looking at the 155.00 level as the next clear target. Fundamentals are still pointing to further topside potential for UsdJpy and traders have noted that the Yen has strengthened, a bit, on the crosses. However, still, the big money is on ‘when’ they will intervene and not ‘if’, if this is the case expect some very volatile sessions ahead this week.
Busy Day Ahead for Global Markets
Today has the potential to be the busiest day of the week for traders, with several key data releases due across the session as well as a multitude of central bankers speaking later in the day from the US. The Asian session will see investors focus firmly on Chinese markets with some key data updates due out midway through the session, Industrial Production, Retail Sales, and GDP numbers are all due out in China, and investors will be hoping for some positive news to turn markets around. The European session sees key employment data out of the UK, with the unemployment rate predicted to edge higher to 4%, but the major focus for the day will again be on the New York session. The Initial focus will be north of the border with the release of the Canadian CPI number. Still, then the focus moves south to the US where we are set to hear from a plethora of central bank big hitters, including the Fed Chair, Jerome Powell as well as the Governors of both the Bank of England and the Bank of Canada.
