Stock markets sold off across Asia, with Nikkei and Hang Seng underperforming. China jitters and the sharp rise in oil prices are weighing on sentiment. USOIL lifted above USD 94 per barrel, stoking inflation concerns and fueling speculation of additional rate hikes, which pushed up the 10-year Treasury yields to the highest level since 2007. The stronger than expected durable goods report and hawkish comments from the Fed dove Kashkari weighed too. Wall Street closed narrowly mixed. Japan’s 10-year rate hit a 20-year year high, with the debt selloff likely to test the BoJ’s resolve to maintain expansionary policies. The US 10-year rate is holding above 4.6% but is slightly down on yesterday’s close. Stock futures are posting fractional gains in Europe and the US as markets wait for central bank signals and in Europe preliminary inflation data for October.
- USDIndex has a good week, climbing for a sixth straight day to a peak of 106.51. EURUSD broke 1.05 floor and GBPUSD settled at 1.2112. The USDJPY corrected to 149.22 post 149.70 highs.
- Stocks – JPN225 and Hang Seng meanwhile lost -1.5% and -1.2% respectively. JPN225 posts biggest 1-day drop in a month as worries for US interest rates stay at elevated levels. US30 slipped -0.2%. The US100 found a late bid and was 0.22% higher, and the US500 edged up 0.2%.
- USOil flirts 94.
- Bitcoin traded above $26,000.
Today: Eurozone consumer confidence, US initial jobless claims and GDP. Fed Chair Powell town hall meeting with educators while Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee make speeches.
Interesting Mover: Gold had a run of declines this week meeting the $1870 support (March gap). This leaves the door open to a near-term rebound but overall further selloff is expected with Support at $1862 and $1845.
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Andria Pichidi
Market Analyst
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