Well, the calmer mood sure didn't last long. After a surge higher in bond yields yesterday, we are seeing a continuation of that with 10-year Treasury yields climbing to their highest levels so far this year. Yields are up another 8 bps today to 4.16% currently, following yesterday's hot ADP employment data.
And this is perhaps what is weighing further on equities after the turn of the month decline and news of the US credit rating being cut yesterday. S&P 500 futures are now down 16 points, or 0.35%, while European indices are posting losses of around 0.9% to 1.1% currently.
In FX, this is lending itself to a slight bid in the dollar as it gains further ground this week. EUR/USD is already down 0.2% to 1.0915 to test key technical support as noted here. Meanwhile, AUD/USD is also pushing slightly lower again as sellers start to turn their attention towards testing 0.6500 next:
Amid the reemergence of safety flows, the yen is also benefiting with USD/JPY now falling from its earlier high of 143.90 to 143.25 on the day.