Video

Playlist

Show less
1:56
FX outlook for next week — #SaxoStrats
John J Hardy
Friday at 14:57 GMT
1:29
Why I'm looking to buy the FTSE: Lambert
Clive Lambert - FuturesTechs
Friday at 8:21 GMT
1:40
Why I’m trading the FTSE: O’Hare
Steve O'Hare - First 4 Trading
Thursday at 8:54 GMT
1:44
Gold outshines silver — #SaxoStrats
Ole Hansen
Wednesday at 12:59 GMT
2:19
Oil and Opec under pressure — #SaxoStrats
Ole Hansen
Wednesday at 10:45 GMT
53:17
FX update webinar: USD pivot — #SaxoStrats
John J Hardy
Wednesday at 9:37 GMT
2:22
Why I’m selling WTI: O’Hare
Steve O'Hare - First 4 Trading
Tuesday at 9:14 GMT
Video / 28 October 2016 at 7:10 GMT

From the Floor: Bond yields on the move — #SaxoStrats

#SaxoStrats
  • Surging bond yields are the key story right now - Hardy
  • Any further rise could strongly affect JPY - Hardy
  • Asian markets opened mixed following yesterday’s moves in bonds and stocks - Liu
  • Today’s economic calendar does not have potential to move markets much - Hardy
  • It does not need much inflation for dramatic moves in government bonds - Boye
  • At one point rates might just have to normalise - Boye
SaxoStrats
 By Clemens Bomsdorf

Moves in bond yields are playing a crucial role in current moves in the markets. "Surging bond yields are the key story right now, any further rise could strongly affect JPY," says John J Hardy, head of FX strategy at Saxo Bank. For USDJPY 107.00 / 107.50 is the next step. Edmund Liu from Saxo's APAC Global Sales Trading reports from Singapore that the USDJPY already "was given a shot in the arm" when the September Japanese CPI came in at annualised minus 0.5% - just as the previous month. This, underlines Liu, clearly increases monetary easing expectations. The Tokyo CPI figures for October, however, show a drastic turnaround, according to Hardy, which could mean inflation is on the way back. The Bank of Japan meeting is scheduled for Tuesday.

USDJPY

Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more


The USD is still going strong as government bonds and US stocks fell. Technically speaking though the USD rally looks increasingly exhausting according to Liu. At least data today is not very likely to move markets as the calendar lacks heavily important numbers to be disclosed. Worth mentioning though are the US GDP revision as well as the preliminary German CPI figure. However, Saxo's fixed income trader Michael Boye states, that in times as we are in now even smaller data could have a big impact.

Monday will bring the Eurozone’s flash CPI and as mentioned Tuesday the Bank of Japan meeting. The next very big event to come is the US presidential election beginning of November (Tuesday, 8). Friday in a week will bring US October changes in nonfarm payrolls. 

Right now we could see that the „10-yr German yield blasted through the pre-Brexit level, which is quite a dramatic move. This happened as the UK GDP for the third quarter came in at 0.5% beating expectations of 0.3% and leading to a surge of 10 basis points in UK 10-yr government yields while German bunds moved almost the same. Last couple of days also futures moved fast. Concerning data Boye is of the opinion that "it does not need much evidence of inflation or global growth to pick up to see violent moves in government bond markets.“ At one point rates might just have to normalise.

market
Buyers' and sellers' markets do not seem to be the only concept... Photo: iStock

Clemens Bomsdorf is consulting editor at TradingFloor.com

Relevant articles for you

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail