Market movers today

Today is another quiet day in terms of economic data releases. In the afternoon, US housing starts, and building permits are due out, which will shed some light on the recent development in construction (where activity seems to be declining after a very hot period).

The 60 second overview

Covid-fears return: Risk assets tumbled across the board yesterday as covid-fears are once again returning to the forefront of investors' minds with the number of new cases increasing in different parts of the world. U.S. authorities issued a travel warning, advising travellers going to the U.K. to reconsider their plans as the number of new cases hit more than 50,000 per day over the weekend, which is only some 10,000 below the levels seen in the beginning of the year. In the U.S. New York State recorded more than 1,000 new cases, the most since May, and in Texas covid-related hospitalisations reached above 3,000 for the first time in three months. Vaccines have appeared effective in lowering the correlation between new cases and hospitalisations, which should limit the need to re-impose strict lockdowns in countries with a high vaccine uptake. 

EU rule of law: In a report due later today the European Commission officially warns of judicial independence being under pressure in both Poland and Hungary, while highlighting other threats to the rule of law such as corruption and favouritism. The report is published as both countries' applications for Next Generation EU funds are currently being assessed, with Poland applying for EUR 24bn and Hungary EUR 7bn. The Commission is under pressure from both MEPs and other member states to toughen up in order to ensure that core EU values are maintained across the union. 

Equities: Equities, as other risk assets, naturally were under pressure yesterday with the S&P500 extending losses (-1.6%) in what has been difficult past seven days (the index is down 3% since last Monday). The VIX increased 4 points to the highest level since the beginning of May. This morning Asian indices are down roughly 1% (Hang Seng and Nikkei) whereas index futures in both Europe and the U.S. points to a stable opening later today.

FI: US government bond yields declined heavily on Monday performing along with other safe haven assets settling in at 1.19%, which was 9bp below the level at market open and 50bp below the levels in May. The move was almost solely driven by longer than 5y yields as curve flattened correspondingly. Longer dated U.S. inflation expectations have come lower in recent weeks, but not enough to keep real rates stable with the 10y USD real rate ending the day at -1.12%, which is only marginally above the all-time low recorded seven months ago.

FX: In a tough session for anything rhyming on reflation NOK FX unsurprisingly took the biggest losses with EUR/NOK back above the 10.50 threshold for the first time since January. USD, CHF, and not least JPY - the traditional winners in a global fixed income rally - all posted gains. Yet the sharp decline in USD real rates limited the appreciation of the USD. Industrial sensitive currencies such as EUR, SEK, and CNH did decent given the global environment while CAD, AUD, NZD joined NOK as the biggest underperformers.

Credit: Credit experienced another weak day on Monday, amid rising concerns about the Delta variant and general uncertainty about the economic recovery. This caused iTraxx Main to widen 1.7bp to 49.3bp, whilst iTraxx xover widened 9.2bp to 247.4bp. The primary market remains subdued due to the summer lull.

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD hovers around 1.1600 amid worsening mood

EUR/USD is trading modestly flat around 1.1600 amid worsening market mood, as China Evergrande fears and US-Sino woes re-emerge. The US dollar despite rising inflation fears. All eyes on US Durable Goods data, corporate earnings and ECB decision.


GBP/USD continues to edge lower toward 1.3700 ahead of US data

GBP/USD came under renewed bearish pressure during the European trading hours and extended its slide to a fresh weekly low near 1.3720. Investors await September US Durable Goods Orders data and the UK budget presentation.


XAU/USD needs to crack $1781 for further downside

Gold price extends losses amid resurgent US dollar demand. Market sentiment sours ahead of the critical US macro data. Falling US Treasury yields could help put a floor under gold price.

Gold News

Dogecoin price to explode 50% as Shiba Inu profits head to DOGE

Dogecoin price has been on an uptrend for roughly a month, but the ascent seems to have evolved to a pattern that hints at a correction. Investors need to be aware of a short-term pullback for DOGE, which eventually results in a 50% climb.

Read more

Bank of Canada Rate Decision: Inflation prospects headline policy review Premium

The Bank of Canada is expected to continue tapering its asset purchases and maintain its current rate posture when it concludes it meeting on Wednesday at 10:00 am EDT. Overnight rate projected to be unchanged at 0.25%.

Read more