Morning Markets: Stocks, bonds retreat as EU talks trade
Watchlist
- Switzerland: SNB forex reserves (0700 GMT)
- UK: Index of production (0830)
- UK: Trade figures (0830)
- Canada: Labour force survey (1230 GMT)
- US: Employment report, including nonfarm payrolls (1230 GMT)
- US: EIA weekly natural gas storage report (1430 GMT)
- US: Federal Reserve’s Monetary Policy Report to Congress (1500 GMT).
Wall Street slumped Thursday, Asia declined in response, and Europe is expected to open in the red as well as the pronounced selloff in government bonds continues to make its presence known across asset classes.
The 10-year German bund yield pushed through the 0.50% level to an 18-month high Thursday and 10-year US Treasury yields rose 5.5 basis points to 2.378% as investors reacted to the prospect of stimulus withdrawal from global central banks. Australia's 10-year bond yield rose eight basis points to 2.716% while Japanese bond yields fell after the Bank of Japan ramped up purchases.
US president Donald Trump's trade policies are again in the spotlight following a barnstorming nationalist speech in Warsaw yesterday. As the G20 summit began in Hamburg, reports surfaced that the European Union is putting together a list of US goods (whisky and dairy products, among others) targeted for retaliation following Trump's call for a limit on steel imports under a 1962 law pertaining to national security.
The USD index is slightly higher into the European bell while the JPY fell to an eight-week low on the aforementioned central bank accommodation.
Today's key data release is the US nonfarm payrolls report for June due at 1230 GMT.
Market signals
Asian session
- Asia joined the global bonds and equities selloff that followed a US weak session
- Spot gold was 0.4 % lower at $1,219.97/oz
- Donald Trump and Vladimir Putin will meet on the sidelines of the G20 summit in Hamburg
- Global sovereign debt yields were elevated across the board
- Japan's Nikkei 225 was down 0.44% to 19,905.71 at 0511 GMT
- South Korea's Kospi Composite fell 0.33% to 2.379,88.
- Hong Kong's Hang Seng was down 0.28% to 25,388.14
- Australia's S&P/ASX200 took a dive; it closed down by a hefty 0.96% at 5.703,60
- The 10-year Treasury note yield stood near a two-month high of 2.391%
- WTI and Brent both declined 1.4%
Forex ahead
- EURUSD was worth 1.1413 at 0655 GMT after gaining about 0.6% overnight
- USDJPY gained as BoJ bond-buying weakened; it was worth ¥113.74 at 0655 GMT
- The flagging Australian dollar regained some lost ground; it was worth 0.7593 at 0655 GMT
- USDPLN rose to 3.7142 in the wake of Trump's speech
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From the Floor
Euro surge. “EURUSD bounced really strongly ahead of the local pivot area around 1.13,” says Hardy.
Tech rout. “We had another selloff [in US tech stocks] yesterday – it looks like they are taking out the least liquid names first,” says Garnry.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
In opinion
1...2...3
There's no doubting today's main event and it's not Trump versus Putin, but rather reactions to an expected moderate nonfarm payroll report, says Juhani Huopainen
Market noise
There's lots of talk around EURUSD, but is it more noise than real talk powered by hawkish sounding remarks from ECB officials, asks Michael O'Neill
Wheat price surge
The 2017-18 crop season is turning out to be the most challenging since 2012, and dry conditions have led to surging spring wheat prices, which could stoke inflation, says Ole Hansen.
Soft rouble
Weak oil prices have weighed on the Russian rouble, and tightening of liquidity and/or lower oil prices could push USDRUB to the 64-65 area, writes John J Hardy.
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