Morning Minutes

Stock Slump, US Dollar Rally Continue as Quarter-End Approaches




The final week of the month and the quarter has picked up where last week left off, with stock markets in retreat, treasury yields soaring and currency markets in turmoil.

US index futures are down 0.4%-0.5% so far today, continuing Friday’s downward momentum that saw US indices fall 1.6%-1.8%. European markets are mostly in the red with the Dax down 0.1% and the FTSE falling 0.8%. The one notable exception has been Italy which is up 0.5% following yesterday’s election of a new government. Asia Pacific trading saw the Nikkei plunge 2.6% and the Hang Seng lose 0.4%.

Treasury yields are broadly on the rise once again today. The US 10-year treasury note yield is trading above 3.75%, the German 10-year Bund yield has broken out over 2.00% and the UK 10-year treasury yield has broken out over 4.0%. The announcement of a new round of tax cuts and other fiscal measures in the UK over the weekend sent the Pound initially crashing down to an overnight low below $1.0400 against the US Dollar but it has since bounced back up toward 1.0800, still down 0.5% to start the week. The US Dollar continues to steamroll over other currencies gaining 0.6% against the Euro, 0.5% against the Canadian and Australian Dollars and 0.25% against gold.  Commodities are also in retreat this morning with Copper down 0.5%, WTI Crude Oil down 0.5% and Natural Gas down 2.9%.

There have been no major economic announcements overnight and this week’s numbers are spread through the week. Notable reports include US durable goods orders and house price reports tomorrow, GDP updates for the US and Canada on Thursday, and US Core PCE inflation plus Chinese and Chicago PMI reports on Friday. A number of central bankers speak through the week, including Fed Chair Powell and Vice-Chair Brainard.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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