Yen surged sharply against dollar overnight as stocks and yields plunged. Sentiments stabilized a bit after Fed chair Janet Yellen's comments and the Beige Book report. And, yen pared back some gains after stocks recovered. S&P 500 dived to as low as 1820.66 before closing at 1862.49, down -15.21 pts or -0.81%. DJIA breached 16000 handle and reached an intraday low of 15855.12 before closing at 16141.74, down -173.45 pts or -1.06%. U.S. 10-Year dipped below 2% level to as low as 1.868% before closing at 2.090%. That's the lowest intraday level since May 2013.
Sentiments were bearish this week on risk of global slowdown. But it's reported that Fed chair Yellen expressed confidence over the economy at a closed door meeting last weekend. Yellen told G30 that the economy is still on track to achieve 3% growth and inflation is moving back to 2% level. That's inline with Fed's projection of 2.6-3.0% in 2015. Markets seemed to be calmed by such reports.
Fed's latest Beige Book suggested the growth momentum was generally similar to the previous month. The report indicated that the 12 Districts generally showed "modest to moderate" rate of growth. On a positive note, "several Districts noted that contacts were generally optimistic about future activity". The report showed that commercial construction grew in most districts. While projects in areas such as Chicago and Dallas were delayed, it was due to shortage of skilled construction workers. Transportation also showed improvement with the demand for trucking, rail and other transportation growing. Insufficient capacity was even seen in some districts such as Minneapolis, Cleveland and Kansas City.
On the data front, New Zealand business NZ manufacturing index rose to 58.1 in September. Australia consumer inflation expectation dropped to 3.4% in October. Eurozone trade balance, CPI final will be the main focus in European session. A bunch of economic data will be released from US today, including jobless claims, industrial production, Philly Fed survey and NAHB housing markets index. Those data could trigger some volatility in all financial markets.