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It was a relatively quiet session as markets took in the calm after the retreat in bond yields from trading late yesterday.
While US president Trump said he might put off attacks against Iran until after the midterm elections, it just means that the status quo in the Middle East will persist for a few more months at the very least.
Oil prices have fallen back today, with WTI crude easing by 0.9% to $90.68. That is helping to take some pressure off inflation risks as the bond market is also keeping steadier today. 10-year Treasury yields had threatened a multi-decade break higher yesterday in a push to 5.35% before falling back. Yields are now settling around 5.25% and while not moving higher, they are still very much keeping broader markets on edge.
But as the bond market catches a bit of relief, we're seeing broader markets also catch a bit of a breather today.
The dollar is trading more mixed, with EUR/USD flat at 1.1207 and USD/JPY up by 0.3% to 158.30. Meanwhile, AUD/USD is up 0.3% to 0.6975 amid a more mixed mood among major currencies in digesting the calm from the bond market.
In the equities space, we're seeing European indices bounce back modestly today but still look set to end the week lower. The DAX is up 0.9% with the CAC 40 up 0.5%, pointing to a decent rebound after the sharp losses from yesterday. Having said that, the jitters from rising borrowing costs and French fiscal risks will continue to be key factors weighing on sentiment in Europe as we look to the weeks ahead.
US futures are holding up better with tech shares leading the bounce today. That comes after a late recovery in Wall Street yesterday, so it carries over some of the better mood as the bond market selling pauses for now. With yields coming off the boil, US stocks will be looking to capitalise to end the week on a more positive note. S&P 500 futures are up 0.4% with Nasdaq futures up 0.8%.
In other markets, gold is also benefiting from the pick up in the broader market mood with the non-yielding precious metal trading up by 1.1% to $4,180. For now, the $4,200 mark remains a key hurdle for gold buyers in trying to establish the next leg higher.
Looking ahead, we do have the Canadian jobs report for September and Michigan consumer survey for October as the two key risk events on the economic calendar. But all eyes will stay on the bond market, in seeing whether this perceived calm in broader markets can hold up before the semi-long weekend. Yes, just a reminder that the US bond market will be closed on Monday next week (stock market will be open). So, just be wary of that.
This article was written by Justin Low at investinglive.com.
Source: Investing Live - News
