In the forex market the NZD and AUD are the weakest of the major currencies, while the EUR and JPY are fighting it out for the strongest. There are risk off flows and play as stock markets move lower. Traders are not giving up on forcing the BOJ despite their inaction yesterday. The JPY moved lower after the BOJ decision to keep the status quo after their meeting, but shot back higher erasing the declines. Also, in NZD the PM Ardern resigned unexpectedly overnight helping to weaken the NZD.
Yesterday in the US, the data dump was weaker than expectations across the board (retail sales, industrial production, PPI) which has shifted the narrative from bad is good, to bad is bad (even if inflation does come down).
Recall from Tuesday, the Empire manufacturing data plunged kicking things off for the week.
In the EU, the ECB Knot reiterated that rates would continue to rise by 50 basis point at multiple meetings which fought back against earlier reports this week that the pace of tightenings was to slow.
Lagarde in Davos said that economic news has become much more positive and that the euro zone may only see a small contraction in GDP. She did say that the ECB will "stay the course" with rate hikes and that inflation is way too high
Today we get another regional in DC with the Philadelphia Fed reporting their January index at 8:30 AM. The expectations are for -11.0 versus -13.7 last month. The weekly initial jobless claims will be released along with housing starts and building permits which are muddling along with a downward trend. The bright spot this week was at mortgage applications increased as buyers reacted to lower rates near 6% as they follow the 10 year yield lower. However, the 10 year yield in the US bounced off its 200 day moving average at 3.331% earlier today. It is currently backup at 3.41%. That may be it for the downside in rates with the Fed liking inflation coming down but still looking at employment and saying "why do anything but continue to force layoffs to push unemployment rate higher?" . The problem is the tightness is a demographic shift as baby boomers retire and that idea, may never come to their satisfaction. Time will tell.
IN other markets:
- Spot gold is up $4.60 or 0.24% at $1908.32
- Spot silver down eight cents or -0.36% at $23.35
- Crude oil trading down $0.44 at $79.36
- Bitcoin is trading back below $21000 at $20746 as risk off sentiment pushes the digital currency lower. Genesis the digital currency broker, is planning to file for Chapter 11 bankruptcy.
In the premarket for US stocks, the major indices are trading lower after falling yesterday .The NASDAQ snapped a 7-day win streak. The Dow and S&P are down 2 consecutive days and working on the third today. Procter & Gamble earnings basically in line with expectations. Netflix reports after the close today
- Dow Industrial Average down -306 points after yesterday's -613.89 point decline
- S&P index down -34 points points after yesterday's -62.13 point decline
- NASDAQ index down -106 points after yesterday's -138.10 point decline
the European equity markets, the major indices are down at least 1.2% or more
- German DAX -1.7%
- Francis CAC, -1.74%
- UK's FTSE 100 -1.24%
- Spain's Ibex -1.89%
- Italy's FTSE MIB -1.4%
In the US debt market, the yields are higher after sharp falls yesterday and in earlier trading today.
In the European debt market, the benchmark 10 year yields are also moving back to the upside:
The German 10 year yield reached the lowest level in a month yesterday dipping to 1.976%. That took the yield below the 100 day MA at 2.084%. The high yield today has reached back to that level at 2.087%. Move above would tilt the bias back to the upside on disappointment from the break. The 10 year yield had not been below the 100 day moving average since mid August (see below line in the chart below).
