- US weekly initial jobless claims 196K versus 190K estimate
- Fed's Barkin: Effects of Fed tightening have been substantial
- U.S. Treasury auctions off $21 billion of 30 year bonds at a high yield of 3.686%
- WSJ Timiraos: Atlanta Fed Wage tracker "trended lower in January"
- Timiraos: The services industry is finding it easier to recruit and fill jobs.
- Mexican central bank hikes rates by 50 bps vs 25 bps expected
Markets:
- Gold down $15 to $18,607
- US 10-year yields up 3.7 bps to 3.67%
- S&P 500 down 43 points, or 1.0%, to 4087
- WTI crude oil down 73-cents to $77.74
- GBP leads, CAD lags
Markets essentially turned on a dime at 9 am ET and there wasn't a particular reason for it. Before that, the US dollar had been struggling and the risk mood was positive, in part due to better earnings from Disney. The dollar hit session lows at 9 am ET and there was no news crossing. Initial jobless claims were largely in line and there was nothing to signal a turn.
The genesis of the turn might have been in bonds where the US 2s10s spread fell to the most inverted in decades, at least on a closing basis. That may have kicked off some algorithmic selling in stocks and a feedback loop elsewhere.
Adding to that move was a terrible US 30-year auction that completed the reversal in bonds and pushed US 30s up 10 bps from the lows. That added another leg to the US dollar rally.
Ultimately, USD/JPY is finishing the day up just 20 pips on the day but that's 120 pips from the lows. EUR/USD finishes up 25 pips but was up 85 pips at the highs.
A particularly interesting on is USD/CAD, which is the only one to break yesterday's highs. That's with the help of a reversal lower in oil intraday and ahead of tomorrow's Canadian jobs report.
Overall, the market is swinging back and forth from optimism about better global growth to pessimism about higher rates and I don't see the paradigm changing any time soon. The next big event is going to be Wednesday's CPI but I also think there's an opportunity in tomorrow's UMich sentiment survey.
