Early jitters:
- European bond yields sink at the open as fear dominates
- Japanese yen rally extends as risk jitters persist
- Gold breaches $2,000 mark for the first time since March last year
Mid-way recovery:
- European indices pare early losses in up and down start to the day
- Gold breakout fizzles as risk sentiment recovers some poise
Economic data:
- Eurozone January trade balance -€11.3 billion vs -€18.1 billion prior
- Germany February PPI -0.3% vs -0.5% m/m expected
- SNB total sight deposits w.e. 17 March CHF 515.1 bn vs CHF 510.8 bn prior
Markets:
- JPY leads, NZD lasg on the day
- European equities higher; S&P 500 futures down 0.1%
- US 10-year yields down 4 bps to 3.36%
- Gold down 0.3% to $1,982.71
- WTI crude down 1.8% to $65.56
- Bitcoin up 5.2% to $28,225
After the takeover of Credit Suisse by UBS and major central banks banding together to bolster liquidity conditions, risk got off to a good start in Asia. However, all of that turned on its head right before European markets opened as the jitters returned.
There was already a bit of a tentative mood during the handover but that quickly descended into an all-out risk-off move as bond yields tumbled and equities were sold off. That led to a gap lower in risk trades when Europe opened, with 2-year German bond yields falling by over 30 bps right off the bat.
It hit a low of 2.09% before recovering back now to 2.23%, though still down 20 bps on the day. Meanwhile, 2-year Treasury yields sank from a high of 4.03% all the way to 3.63% but is now seen holding around 10 bps lower at 3.74%.
It was a volatile one with equities also dragged for a ride. Credit Suisse shares opened over 60% lower as the fears reverberated and European banking stocks were down about 6% before paring that just under 2% now. Meanwhile, the turnaround saw major indices in the region come back up to positive territory with S&P 500 futures paring a 50-point drop to be down just 4 points now.
There wasn't any major headlines leading to the turn in sentiment, as right now markets are continuing to trade on emotions.
I would say the longer we go without any major headline scares, that would lead to steadier hands in play.
In FX, USD/JPY initially saw a big drop from 131.80 to 130.55 but has now recovered slightly around 131.00 on the day. The dollar traded up and down in mixed fashion, following the market mood but is now sitting little changed across the board elsewhere.
In the commodities space, gold attempted a break above $2,000 early on amid the negative risk mood but has seen that advance pull back to sit lower on the day now.
