Markets:
- Gold down $10 to $2734
- US 10-year yields up 10 bps to 4.38%
- WTI crude oil up 20-cents to $69.46
- S&P 500 up 0.4%
- GBP leads, CHF lags
The crosscurrents in markets continued on Friday as we depend all the way down to the US election. It is robust to separate strikes primarily based on financial knowledge from election de-risking and election positioning. The stress is undoubtedly ramping up and betting odds shifted again in direction of Harris more-recently, including a wrinkle.
The principle occasion of the day was non-farm payrolls and the studying was simply +12, far wanting +113K anticipated and the US greenback instantly fell onerous, 40 to 90 pips, with USD/JPY hit significantly onerous. Nevertheless all these US greenback declines have been finally erased.
A part of that was as a result of the market wasn’t satisfied that the roles market is deteriorating, regardless of at -112K two-month web revision. The opposite issue was one other fast rise in Treasury yields, from a low of 4.22% post-data to 4.38% and an in depth on the highs. That transfer additionally helped to sap danger and weighed on commodity currencies and the euro.
It isn’t totally clear what’s driving the bond transfer however the ache in UK bond markets following the UK finances is topical, particularly in eventualities the place one get together sweeps congress. Nevertheless it is also so simple as uncertainty and de-risking round a large doable vary of election outcomes. Lastly, the costs paid part of the ISM manufacturing survey was sizzling, which can have ignited some inflation fears (although I discover {that a} stretch).
Have a terrific weekend. Relaxation up as a result of subsequent week may very well be loopy.
