• S&P 500 down 7 points to 4670
  • Nasdaq flat (was down 2.7%)
  • WTI crude do0wn 54-cents to $78.36
  • US 10-year yields down 1 bps to 1.76% after touching 1.80%
  • JPY leads, CHF lags

The yen was the star performer today as markets arrived in a bad mood. Rates moved up early and then tech rolled over, leading to a broad bout of risk aversion. Toss in worries about omicron in China and it looked like a rough start to the week, all of it kicking off in early North American trading.

Then JP Morgan quant Marko Kolanovic rode to the rescue of the start market. He said to buy the dip (he was right in Oct in a similar call) and that overshadowed Goldman and his boss talking about 4 Fed hikes this year or more. Maybe it was a coincidence but that was the bottom and then the TINA trade kicked in, sparking an impressive turnaround.

In FX, the turn was far more subdued. The pound recovered most of its losses against the dollar but commodity currencies only came halfway back (or less).

Yen crosses got off the floor but only slightly and that was the dominant theme.

One thing I need to touch on is the slump in the Swiss franc. On a day where stocks were briefly getting wrecked, it could find any sort of a bid. Instead, there was an extremely steady bid in EUR/CHF to take it to 1.0500, which is where it stopped. That's the kind of thing that looks an awful lot like intervention but could also have something to do with the imminent rise in bund yields above 0%.

The buying in EUR/CHF likely boosted the euro overall. It recovered from a low of 1.1286 against the dollar to 1.1330 in a round trip move in US trade.

news wrap Jan 10 2022