• Gold down $3 to $1671
  • WTI crude oil up 55-cents to $83.48
  • US 10-year yields up 19 bps to 3.70%
  • S&P 500 down 32 points or 0.8% to 3757
  • JPY leads, CHF lags

The past 26 hours were one for the books. It started with the FOMC, then BOJ, then Japanese intervention, the SNB dovish surprise and the BOE hiking 50 vs 75 bps expected. In North American trading there was a chance to sort through the wreckage due to relatively light newsflow but there are still far more questions than answers.

The main one relates to the blowup in the bond market today with yields up 10-20 bps across the curve and extending through most sovereign markets. There is a lot of talk and theories with the simplest ones coming back to the Fed but I struggle to see why long-dated yields would move up on a hawkish Fed. Today's TIPS sale was very strong as well, highlighting real money demand.

I lean more towards Japan where unhedged investors may be getting nervous after the FX intervention. That could be causing a parade of selling Treasuries and buying JGBs or parking it in shorter-dated yen instruments. The BOJ stuck to the script today but there won't be any hints or preannouncement if/when they pull out the rug on yield curve control. In addition, rising global recession risks are an impetus to buy yen (though not exactly to sell USD).

There was certainly a 'sell everything' mode in the market as well on intense uncertainty and volatility. Sentiment is terrible and de-risking is the mood. Despite that, the euro, pound, dollar and commodity currencies finished the day nearly flat.

The lone real move today was in the yen but what a move it was in the first intervention in 22 years.

All eyes will remain on the yen and bonds in the day ahead. Powell speaks but it's opening remarks at a 'Fed Listens' event so probably won't touch on monetary policy. We'll hear from Brainard and Bowman along with consumer confidence and durable goods orders.

FX news wrap Sept 22