- Russia sounds like it's serious about cutting off gas this time
- US March durable goods orders +0.8% vs +1.0% expected
- Atlanta Fed GDP Now Q1 GDP tracker cut to 0.4% from 1.3%
- Brainard officially promoted to Fed vice chair
- US treasury auctions off $48 billion of to year notes at a high yield of 2.585%
- US March new home sales 763K vs 765K expected
- US February Case-Shiller 20-city home price index +20.2% vs 19.0% expected
- What the largest US home builder is seeing
- Dallas Fed services sector outlook +8.2 vs +10.6 prior
- US April Richmond Fed composite index +14 vs +13 prior
- Japan PM Kishida: Must look at both positive, negative aspects of weak yen
- Philadelphia Fed nonmanufacturing business activity index 27.5 versus 38.1
Markets:
- S&P 500 -2.8%
- Nasdaq -3.9% (worst day since Feb 3)
- Gold up $7 to $1904
- WTI crude oil up $3.35 to $101.89
- JPY leads, GBP lags
What a beating. Small bounces in risk assets were sold despite falling yields. Yesterday tech tried to stage a rally but today it was overwhelmed and the Nasdaq fell fractionally below the February low. With GOOG missing on earnings and futures looking ugly already, the odds of that low holding are now low.
All correlations have essentially gone to 1 now. Cable continues to be a prime relief valve as it fell hard for the thrid straight day since breaking 1.30. It lost another 168 pips to 1.2572 and is rounding out the day at the lows. You have to squint to even find a 20-pip bounce in today's trading.
Commodity currencies were hardly better. AUD and NZD were sold all day and will finish on the lows. CAD got some support from the remarkable (considering) rally in oil but even that couldn't stem the selloff. Technically, AUD/USD is now at a two-month low and the sharp reversal in AUD/JPY continues. NZD/USD continues to track towards the year-to-date low of 0.6503 with only about 60 pips now separating it.
USD/JPY is an interesting one. It's holding up much better than yen crosses but there's a growing case to sell the pair as inflation worries turn into growth worries, something I spoke about in the video below.
In the day ahead, I expect much of the attention to be on the natural gas market. This time it sounds like Russia is serious about cutting off gas supplies. That could kick off a crisis in Europe, despite some brave words today. The euro is now right at the pandemic lows and if it breaks, we could see the same kind of rout as in cable.
Note how nearly everything is closing at the extremes... that's not a good sign.
