Asia saw a dramatic 8.5% collapse today, and London began their session today looking at Asia. European futures were all obviously lower and did not look back from the open. The U.S. session accelerated the fall that strengthened the recent flight to quality by helping to cement the ultimate peak in government debt in short-term rates.
Oil was under pressure yet again today (Brent 53.45 -2.2%) which hit the Russian rouble closing down 1.6% on the day. We also saw the Turkish lira lose another 1.2% on the day, which sadly has become a daily occurrence amid the recent violence.
Today’s curve move tells the picture, given the flight to quality in the bond market, and the Fed in play this week. We saw 2yr better by 2bp (0.65%) whilst 5yr were lower by 5bp and 10s by 4bp. The 5yr notes last traded at 1.57% and 10s at 2.22%. All this purpose and yet volumes are still a shadow of yesterday’s markets. Even with the renewed bond market interest, daily volumes for Bunds are still only around 400k contracts, warning that there is no real depth to these markets.
Bund/TY 10yr spread closed this evening at 153bp which, given the strength of the euro, was a very impressive performance for U.S. Treasuries.
Gold behaved relatively well today, trading in rather tight ($17 range). Early attempts at maintaining the 1100 level were dashed as the U.S. opened.