A mixed session out of Asia with not one market providing a clear sense of direction! The Nikkei and Shanghai spent the day flip-flopping between red and black whilst the Hang Seng saw selling throughout the day. All core European Indices returned negative performances today with declines between -0.2% and 0.6%. The U.S. opened weaker after yesterday afternoon’s bounce with some profit-taking ahead of PMI and Sentiment tomorrow in what has been a reasonably heavy stats week. Worth mentioning here is that tomorrow we also see Eurozone inflation where expectations are for a 0 (zero) print with previous being -0.1%.
Commodities had a fairly dull day today with oil only marginally firmer at $46.10 (TWI). Gold, on the other hand, was not the flavor of the day, rejecting all attempts to rally earlier in the day and was last seen trading $1146.
Bonds on both sides of the Atlantic were weak with U.S. 10s losing 8bp and bunds 9bp. US 10s have had problems with the psychological 2% barrier for a while now and still remains on elusive ground. The spread TY/RX closed this evening at +160bp. The curve steepened in the sell-off with 2/10 closing +143bp and 10/30’s at +80bp (that puts 30’s around the 2.95%).
The euro recovered a little of yesterday’s loss (last seen at 1.0978), as did GBP. These gains managed to turn the DXY negative on the day -0.5% at 97.35.
We heard a lot of talk today of the Philips Curve (measuring employment with inflation) and whether the Fed is actually looking at domestic or indeed international matters. One dealer concerned with the Fed has been referring more to markets more than domestic data!