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Markets:
- Gold down $1 to $1666
- WTI crude down $2.53 to $88.60
- US 10-year yields up 4.6 bps to 3.93%
- S&P 500 down 25 points to 3599
- NZD leads, GBP lags
Markets started off the day in a bad mood but the tone improved as New York arrived. That didn’t last long as tech led the selloff in equities. The IMF helped it along with a cut to 2023 GDP estimates and a warning on financial stability.
But market showed some resilience and when a bid appeared for bonds, the entire market turned. The US dollar sold off and the S&P 500 erased a 40 point decline to trade 10 points higher.
All was looking clear until the BOE’s Bailey spoke and slammed the door on extending the gilt purchase operation. That sent cable more than 100 pips lower and sparked a broad US dollar bid. Equities tumbled again in the usual risk off manner.
In the final 40 minutes of trading there was some modest dip buying but hardly enough to make a difference. All eyes will be on the long end of the gilt market tomorrow when UK trade resumes.
The other spot to watch is USD/JPY as the USD bid pushed it up to 145.82 and just shy of the 145.90 level where the MOF intervened previously. I’d expect at least some jawbonning.
The other notable move in my mind is that commodity currencies held up ok today what is perhaps a sign of optimism but how upbeat can anyone be ahead of Thursday’s CPI report?
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