Markets:
- Gold down $2028
- WTI crude oil down 80-cents to $73.27
- US 10-year yields up 3.7 bps to 4.26%
- S&P 500 down 27 points to 4573
- USD leads, AUD lags
The theme on Monday was giving back some of the recent enthusiasm. Everything that worked in November reversed — bonds, stocks and short-USD.
An early hint was in the gold market, which blew out to $2135 in a moonshot before falling more than $100 from the peak. The dollar was helped by rising Treasury yields, especially at the front end as the market offered a small reconsideration of the aggressive easing priced into the curve.
EUR/USD began falling early in New York and skidded 75 pips to 1.0805 before a 30 pip bounced in the latter part of the day. Cable fell and bounced by the same margins as risk trades tried to find a footing late.
USD/JPY touched an eight-week low in Asian trade before rebounding and finishing 40 pips higher in choppy trade.
The antipodeans gave back all their Friday gains, in part due to an escalating war of words between the US and China. Commodity prices struggled to start the new week as the soft landing talk cools.
On Tuesday, US traders will be looking forward to the ISM services data, which could help set the tone until Friday’s US jobs report.