Asia saw a mixed session where most markets were lower but talk of intervention in China saw a very healthy bounce in the last few minutes of trading (Nikkei -2.5% Shanghai and HSI both up around 3%). Europe started on a positive note and never looked back. Positive session for all major European Indices saw exchanges close 1%+. All major U.S. Indices closed 2%+.
Confidence was high in the bond markets, as witnessed by the peripheral performance against the core. BTP’s and SPGB’s (Italy and Spain) both government spreads tighter by roughly 2/5BP. In the U.S. Treasury market the curve flattening theme was unwound and 2/10 and 10/30’s both steepened 3bp. The TY/RX spread closed +149BP putting U.S. 10s at 2.18%.
The U.S. dollar gave back a little ground also with the U.S. Dollar Index (DXY) closing at 95.85 (GBP the main performer +0.7%).
There was more talk of the Fed delaying any possible signs of raising rates, and that was one reason for the stock market’s performance and the US$ weakness. Oil and the Russian rouble almost traded hand-in-hand with a 3.8% rally in Brent, whilst the rouble saw a solid 1.5% gain against the U.S. dollar. We had one of the quietest sessions in gold, only trading in an $8 range around Monday’s close, as people remain confused by the lackluster performance on the upside.