Markets beginning to exude more calm on the day

Author: Justin Low | Category: News

Treasuries have pared gains from Asia Pacific trading

Of note, 30-year Treasury yields are back to flat levels now after having seen a drop of more than 5 bps earlier today. US futures are also displaying more steady sentiment with E-minis higher by almost 0.7% currently.

The mood among European equities isn't keeping in tone but I reckon we should look past that for the moment and focus on the bond market instead.

The magnitude of the move higher in Treasury yields certainly fits with a weaker yen but the ~90 pips jump earlier was certainly something that I myself can't figure out. It could be fat finger or a case of over-the-top flows amid thinner liquidity but it is what it is.

USD/JPY has since been holding around 106.20-30 as buyers hold near-term control now and that fits into the theme we're seeing in the bond market this morning.

Looking ahead, the next key risk event will be the release of US economic data.

With recession fears already heightened, markets will be paying extra attention to the slew of data coming out today from the US. Here's the list:

1230 GMT - August Empire state manufacturing index
1230 GMT - August Philly Fed manufacturing/business outlook index
1230 GMT - US July retail sales data
1315 GMT - US July industrial production data

In addition, we'll also have initial jobless claims and housing market data but I reckon markets will be more sensitive to the releases above.

For now, the yield curve isn't looking so "crazy" but let's see how things play out.


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