- Choppy trade in Asia and Europe
- HK Security law passed
- Nikkei 1.33% Dax 0.20%
- United States 10-Year 0.63%
- Oil $39/bbl
- Gold $1770/oz
- BTC/USD $9148
It’s been a very quiet listless night of trade in both FX and equities, with bond yields compressing further, as bullish sentiment continued to wane.
In FX, the dollar was mildly better bid on risk-off sentiment with EUR/USD testing the 1.1200 barrier and cable still below the 1.2300 mark, as currency markets remained essentially moribund in absence of any major economic news this week.
The slight, but persistent, drift lower in US yields suggests that bonds markets are not anticipating the type of growth that equities are priced for and, indeed, today’s CPI data out of Europe confirmed that price pressures remain depressed with normalized series coming in at -0.4% versus 0.1% eyed.
US yields have been remarkably constant over the past several months with 10-year note essentially trading at 60 to 70 bps, but the failure of yields to break above the 70 bps level may be an early signal that a risk-off correction is coming.
We have been noting for days that both the NASDAQ and the S&P have struggled to break higher with 10,000 level capping any advances in the NASDAQ and 3100 containing the run up in the S&P. The S&P is already trading below its 20-day SMA, suggesting that it’s given up its bullish bias and the NASDAQ is teetering on the edge.
Still, the bulls refuse to go quietly, as every dip continues to be bought. But if the markets don’t make fresh high relatively soon, the path of least resistance will be lower, as risk assets brace for a much overdue correction after the massive run-up in the past few weeks.