Murali Sarma
Trade Guidance, LLC
A more hawkish than expected US Central Bank sent the greenback and rates higher and spurred an equity sell-off. The knock-on effect sent ripples through the capital markets on Thursday. Most equity markets in the Asia-Pacific region fell. China, Hong Kong, and Taiwan were notable exceptions. Europe's Stoxx 600 is snapping a nine-day advance, with losses led by information technology and utilities. Financials and energy sectors are posting modest gains. US futures are off around 0.3-0.5%. The US 10-year yield jumped eight basis points yesterday, the most in three months. It is slightly softer today, around 1.56%. European yields are 3-5 bp higher, while strong data from Australia (jobs) and New Zealand (Q1 GDP) saw benchmark 10-year rates jump 9 and 13 basis points, respectively. The dollar remains firm, but the Antipodean currencies and yen are showing some resilience. Emerging market currencies are lower, and the JPMorgan Emerging Market Currency Index is off for the fifth consecutive session. Gold, which had been probing $1900 at the end of last week, is now flirting with support near $1800. Iron ore prices are lower for the second day, while steel rebar fell for a third session. Copper prices are lower for the third time this week. A larger than expected draw of US inventories (-7.3 mln barrels) may be helping limit oil's pullback. July WTI has backed off from testing $73 but remains above $71.
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