Fresh Stock Records Set as Nvidia Rises to Number 1
US markets pushed higher again last night as Nvidia became the biggest company in the world after adding 3.5% to its stock price to overtake Microsoft and Apple. The S&P and Nasdaq both hit new records closes again even though overall gains were small, after mixed data hit the market, the Nasdaq adding just 0.03% on the day, the S&P rose 0.25% and the Dow closed up 0.15%. US treasury yields dropped, the 2-year lost 3.8 basis points to 4.724% and the 10-year fell 6.2 basis points to 4.217%. The dollar traded in familiar ranges, although notably lost ground against the Aussie after the RBA held rates steady but advised that hikes were possible. Oil prices climbed on geopolitical concerns in Europe, Brent rising 1.3% to $85.33 a barrel and WTI gaining 1.5% to $81.57 a barrel. Gold pushed back into mid-range, gaining 0.4% on the day to close around $2,329 an ounce.
Dollar Traders Closely Watching US Yields
Recent data releases and updates from central banks have led to several breakdowns in traditional correlations over the last few weeks and investors are preparing themselves for more of these instances in the coming months. FX traders have been noting the dollars resilience in the face of falling US treasury yields over the last couple of weeks and this can be accounted for by recent political turmoil in Europe causing haven flows to move to the more stable greenback. 10-year yields dropped over 20 basis points last week while the dollar experienced one of its best weeks in months. The question will be if this is a short term break down or if we are set to see more of the above in the coming months, the dollar is now sitting at some key levels against other majors and breaks in the next few days could see if moving north further and harder, no matter what happens with yields.
Quieter Trading Day Ahead for Investors.
US markets are taking a break later today and that is likely to weigh on volatility across the trading zones today as investors take the opportunity to reassess recent updates. The Asian session has little on the calendar, although Yen traders will pay more than a passing interest to the BOJ’s Monetary Policy Meeting Minutes early in the session. The main risk event of the day comes early in the London session with the release of the UK CPI data, expectations are for the year-on-year number to print at 2% and any significant deviation from this will see strong moves in the pound. Liquidty is likely to be an issue later in the day with US markets on holiday so traders will be aware of possible sharp reactions to any fresh news once European markets close for the day.
