Headlines:
- 10-year Treasury yields clip the 5% mark
- Equities dragged lower, dollar muted as 10-year US yields hit 5%
- USD/JPY but a whisker away from retesting the 150.00 mark
- The key risk events to watch out for in trading this week
- Heads up: A note on the UK labour market data due tomorrow
- SNB total sight deposits w.e. 20 October CHF 478.8 bn vs CHF 483.8 bn prior
Markets:
- EUR leads, NZD lags on the day
- European equities lower; S&P 500 futures down 0.4%
- US 10-year yields up 6.5 bps to 4.988%
- Gold down 0.1% to $1,978.51
- WTI crude down 0.6% to $86.30
- Bitcoin up 3.7% to $30,690
The session started off with some light relief as the Israel-Hamas conflict did not escalate significantly over the weekend. That saw safety flows abate as equities gained by the slightest of margins while bonds were offered as well. That also saw both gold and oil hold lower ahead of the open in Europe.
But as European traders entered, the focus turned towards the bond market as 10-year Treasury yields jumped up above 5% to its highest levels since 2007. The move is a rather brief one though as yields track back to ~4.98% now as Europe waits on validation from US traders later on.
The push higher in yields weighed on stocks as S&P 500 futures was dragged down by 0.7% at one point, before halving losses now.
However, outside of equities, the reaction to yields touching 5% was rather muted. Gold trimmed its earlier losses alongside oil, with the precious metal climbing back up to $1,978 currently from a low of $1,964 in Asia.
Meanwhile, the dollar barely responded with the euro, yen, and pound all trading flattish against the greenback for almost the entirety of the session. USD/JPY in particular remains one to watch as it seems to be holding back dollar bulls, with the pair continuing to hover just below the 150.00 mark at around 149.80-90 levels today.
It is now over to Wall Street to make do with the bond market and if we are to see yields retrace lower after touching 5% now, I would expect that to translate to some bout of dollar weakness across the board; vice versa.