U.S. Bond Rates Spike, Asia Falls

Asian markets lost ground today as they tracked the American markets. Investors are growing more nervous as to when the Federal Reserve Board will start to roll back its quantitative easing program.

Wall Street’s losing streak hit four days in a row, the longest losing streak of the year. Yields on the U.S. Ten Year T Note hit 2.9 percent, which was their highest level in almost two years.

STOCKS

Indonesian benchmark, the Jakarta Composite tumbled 2.5 percent today. Yesterday, Monday, the market lost five percent of its value. Would seem capital outflow from these markets are continuing.

The Australia S&P/ASX lost 0.5 percent on the day. This comes after the minutes of the last central bank meeting were released. Markets were relatively unfazed as nothing shocking was in them. They did reveal, as expected, possible future rate cuts could happen. The bank also said the nation’s currency had more room to fall. Weak corporate numbers hurt worse as the index is now trading near a low not seen since August 12.

The Nikkei 225 also lost 0.5 percent today and the Kospi in South Korea rose 0.2 percent. The Shanghai Composite was flat today.

U.S. markets have certainly started this week with a loud whimper. The DJIA and the S&P 500 have now seen a four day losing streak as treasuries hit a two year high. Please see below chart.

The Dow lost 70 points to close near 15,000 at 15,010.74. It has seen its worst weekly decline since 2013 as it has now lost over 2 percent of its value. The S&P 500 lost 9.77 points to finish at 1,646.06 and the NASDAQ fell 14 points to close at 3,589.09. Both the DJIA and S&P 500 can see their biggest monthly losses since 2012, if they do not turn around.

CURRENCIES

The AUD/USD (0.9055), surprisingly, moved lower yesterday. Instead of targeting 0.9300, the market fell and is now testing 0.9050. The Royal Bank of Australia favors a weaker Aussie and lower interest rates. The USD/JPY (97.53) continues to look bullish. We see strong resistance at 98.40. That level will need to break to continue gains, if not we could range trade from there for a bit.

The EUR/USD (1.3349) is still range bound and looking for direction. So is the GBP/USD (1.5643).

COMMODITIES

Silver (23.075) has fallen since yesterday. However we are still bullish to target 23.97 and then 24.25. Gold (1363.60) has fallen a little bit after testing the resistance at 1380.90.

Copper (3.3185) has fallen since yesterday. We need 3.300 to hold to see a recovery to still target 3.400. Break below that level, at 3.300, could test 3.25 next.

WTI Crude (106.86) fell as U.S. crude inventory rose. Brent Crude (109.64) has also fallen as the resistance at 110.99 continues to hold. We could be targeting the support at 108.00 which should hold.

TODAY’S OUTLOOK

Today is another quiet day. We could see some play in oil prices, but it would seem the political instability in Egypt is already priced in so we might not see a big up move there. Investors are waiting on the Fed to meet in September, so expect a lot of range trading in the Forex and Commodity markets.

Tomorrow, will see some data coming out of the United States that could move bond yields even higher. We should be paying attention to the Dollar Index as the 10 year notes are spiking near 3 percent now.