Article / 31 May 2016 at 11:31 GMT

Mid-session Europe: Bonds and equities soggy as FX treads water

Saxo Markets


Foreign exchange

Markets opened on Tuesday with the prospect of a US interest rate rise getting ever closer. Bonds fell, equities fell and oil continued its longest run of monthly gains in 5 years.
Gold was higher by $0.5 after sliding 6% over the last couple of weeks, also driven by the idea of higher US rates.
FX was relatively subdued with the dollar index unchanged on the day and JPY flat around 111.05


  • Canada quarterly GDP annualised (12:30)
  • US Chicago purchasing manager index May (14:45) 
  • US consumer confidence (14:00)


FX Options volatilities
EURUSD: Vols are trading a touch lower; most interesting is the Thursday European Central Bank event which has been marked down today. Friday NFP event still attractive.
USDJPY: RR trading closer to par, but still favouring USD puts.
GBPUSD: Forward vol for the Brexit event is still coming off. The o/n from 23 to 24 July down from 80 vols last week to 72 vols today.

Fixed income


Small drops across European fixed income markets in both corporate and government bond markets. Bunds future currently at session lows with a 0.18% 10-year yield while XOVER credit spreads are a few bps wider on the day. CPI numbers were in line and failed to move the market, so the next catalyst will likely be the European Central Bank meeting and the US job numbers towards the end of the week.


European markets are lower this morning with Euro STOXX 600 down 0.25% on light volume. ECB and Opec meetings on Thursday and nonfarm payrolls on Friday, will be on the minds of investors. Energy names are underperforming today whilst the Technology sector is marginally outperforming.
Volkswagen’s first quarter earnings missed estimates, sending the stock 3% lower as the emissions scandal hits profits.
IG Group is up this morning after reporting solid numbers and forecasting its full year earnings being slightly ahead of market expectations.

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Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

US:        US Market Wrap: FX majors drift sideways on US holiday

Europe: Morning Markets:  Stocks healthy ahead of US data

 Markets looked promising before the opening bell but soon turned soggy. Pic: iStock

— Edited by Clare MacCarthy

The Global sales Trading desk is a multi-asset team providing customised trading solutions


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