Kevin Buckland takes a look at the day’s trading in the European and international markets.
On Friday, there was some welcome peace in the markets, but there is concern that this calm is only the beginning of a storm because the U.S. payrolls data will be released at a time when uncertainty about how aggressive the Fed should be has caused havoc across all asset classes.
An gruelling week has already passed, with the yen suddenly rebounding from the carefully watched 150 per dollar mark, Treasury yields marching to 16-year highs, crude oil falling from almost $100 a barrel, world equities falling to their lowest level since March, and Treasury yields rising to new 16-year highs.
U.S. rates have settled at 4.72% today, the yen is at a comfortable 148.50, and Brent is creating a floor above $84. APAC markets are strong, with Hong Kong’s 1.8% gain in particular painting a positive picture for the Monday resumption to trading on the mainland after a weeklong break.
On Europe’s data calendar, there isn’t much that will divert attention from American unemployment for very long.
European equities may aim to expand on yesterday’s recovery from March lows if mood in Asia remains positive.
Bond investors will want to keep an eye on the upward pressure on Japanese yields, one area of market eccentricity.
With unexpected yield-suppressing operations taking place on Monday, Wednesday, and Friday this week, a disappointing 30-year Japanese government bond auction on Thursday conveyed a disturbing message about how little investors appreciated the Bank of Japan’s aggressive stimulus.
The BOJ’s policies also conflict with the government’s aim to stabilise the yen. Officials continue to decline to discuss if they were responsible for Tuesday’s abrupt rebound, but data from the central bank itself suggests Tokyo has not yet entered the market.