Article / 12 September 2016 at 7:00 GMT

Morning Markets: Runaway bond yields?

Head of Editorial Content / Saxo Bank

Morning Markets: Prices


  • Italian Quarterly Unemployment Rate (0800 GMT)
  • FOMC member Lael Brainard speaks (1700 GMT)

The week starts with several new risk events on the calendar, with bonds in particular in focus as yields for 10-year Japanese government bonds and two-year US Treasuries surge with the former inching closer to positive territory and the latter looking to extend its recent gains.

The weekend also introduced a potential political risk event for close followers of the US election when Democratic nominee Hillary Clinton suffered what the New York Post called a "medical episode" at the 9/11 memorial event, having to be rushed from the scene after collapsing at the event. 

Media are reporting this morning that Clinton was diagnosed with pneumonia ahead of the event, and was overcome by heat and humidity, but her taking ill comes in the wake of several weeks of allegations from largely alternative media claiming that the candidate's health is far poorer than voters are being led to believe. 

Clinton spoke to press later that day and said she was feeling "great" but the combination of circumstances has raised the "Hillary's health" story from the media's fringes to its centre, and may have an unpredictable impact on the election campaign. 

Finally, the Australian ASX 200 sold off overnight with miners and energy stocks hit hardest. With the European Central Bank's outing last week having borne no new policy fruit, investors will be looking at the September 21 Federal Open Market Committee and Bank of Japan meetings for new clues as to the plans afoot at the major central banks.

Otherwise, as far as stocks go, the downturn appears set to continue.

Market signals

Asian session

  • Asian markets opened in the red following US declines Friday
  • Japan core machinery orders rose unexpectedly in July; up 4.9% (minus 2.8% expected)
  • Japan's Corporate Goods Price Index year-on-year was down 3.6%
  • Shipping rates rise as South Korea's Hanjin shipping company collapses
  • Global selloffs in stocks and bonds resumed in Asia
  • The MSCI Asia Pacific Index dropped by the most since June
  • Oil sank toward $45 a barrel as nickel led declines among industrial metals
  • South Korea’s won slid by the most in three weeks versus the dollar
  • The Nikkei 225 was down 1.92% at 0526 GMT

Forex ahead

  • The Aussie fell more than a cent on Friday's market turbulence
  • It's now fetching US75.30 cents, down from US76.33 cents on Friday
  • Markets await China's factory output, retail sales and new loans data tomorrow
  • GBPUSD ascends overnight, hitting 31.80 in the early European morning
  • AUDNZD loses the 1.30 handle and declines into the Euro bell
  • AUDUSD trending lower after poor Aussie session

From the Floor

Dangerous times.QE is not working, central banks are lost and they know that they’re lost,” Jakobsen

Big impact.The asset market collapse boosts USD and JPY and weakens EM and commodity currencies,” Hardy 

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Brazil's sentiment has been trending higher for much of 2016 and there appears to be enough goodwill to maintain a positive bias, writes James Picerno

ASX selloff
The ASX followed overseas leads to open lower and looked set for its worst day since Brexit, with losses across all sectors, says the team at Saxo Capital Markets (Australia). What was that about?

The week in currencies

Following a strange and inconclusive ECB outing, what's ahead for the major currency pairs heading into the next round of central bank meetings, wonders John J Hardy?

Freaky Friday

Last week ended with a final offbeat trading session with a VIX rally and stretched yields potentially pointing to a correction ahead, says Kay Van-Petersen.

Bump in the road

Equities and bonds have hit a bump in the road in the wake 

of last week's ECB meeting. Photo: iStock

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