Today seems to be a case that markets are feeling if central banks are going to stick with higher rates, that is going to rattle the global economy harder. That seems to be the message as bond yields reverse to turn lower and equities also hit the skids alongside other risky assets such as oil.
I mean, in the past week we have seen market pricing for the Fed adjust to be less dovish with the three rate cuts priced in for year-end on Thursday last week now reduced down to just two rate cuts. I highlighted that here yesterday but you can see the graph below for a bit of reference:
That coincided with a move higher in rates until today, in which we are seeing the bond market run against that narrative as the risk mood starts to get threatened.
So far, major currencies aren't really reacting all too much with the kiwi still arguably being the only notable mover so far today. That owes much to the softer NZ CPI data earlier, with the NZD/USD picture in focus here.
But perhaps I'm looking into the moves a little too much. The technical outlook could also be a factor with 10-year Treasury yields essentially hitting some resistance with the 100-day moving average in play:
So, there is also that point of view to also consider when looking at how broader markets are reacting today.
