Markets:
- Gold down $10 to $2734
- US 10-year yields up 10 bps to 4.38%
- WTI crude oil up 20-cents to $69.46
- S&P 500 up 0.4%
- GBP leads, CHF lags
The crosscurrents in markets continued on Friday as we depend right down to the US election. It is robust to separate strikes primarily based on financial information from election de-risking and election positioning. The stress is undoubtedly ramping up and betting odds shifted again in the direction of Harris more-recently, including a wrinkle.
The primary occasion of the day was non-farm payrolls and the studying was simply +12, far in need of +113K anticipated and the US greenback instantly fell laborious, 40 to 90 pips, with USD/JPY hit significantly laborious. Nonetheless all these US greenback declines had been finally erased.
A part of that was as a result of the market wasn’t satisfied that the roles market is deteriorating, regardless of at -112K two-month internet revision. The opposite issue was one other speedy rise in Treasury yields, from a low of 4.22% post-data to 4.38% and an in depth on the highs. That transfer additionally helped to sap threat and weighed on commodity currencies and the euro.
It is not completely clear what’s driving the bond transfer however the ache in UK bond markets following the UK funds is topical, particularly in eventualities the place one get together sweeps congress. Nevertheless it may be so simple as uncertainty and de-risking round a large doable vary of election outcomes. Lastly, the costs paid part of the ISM manufacturing survey was scorching, which can have ignited some inflation fears (although I discover {that a} stretch).
Have an awesome weekend. Relaxation up as a result of subsequent week might be loopy.