Daily Report: Treasury Yields Dive In Mixed Markets
ActionForex | Sep 28, 2016 02:20AM ET
The financial markets remain mixed for the week so far. US equities rebounded overnight on stronger than expected consumer confidence data. DJIA closed up 133.47 pts or 0.74% at 18228.30. S&P 500 closed up 13.83 pts or 0.64% at 2159.93. But sentiments reversed in Asian session with Nikkei trading down -1.54% at the time of writing. Dollar index recovered yesterday but is still gyrating in tight range around a flat 55 days EMA, at around 95.5. Aussie remains the stronger major currency but Kiwi is starting to lag behind. Meanwhile, another commodity currency, Canadian dollar, is the weakest one this week as dragged down by oil prices. Others are mixed, looking for a direction.
The more notable and sustainable movements are found in bonds. Germany 2 year yield dropped to a record low of -0.707 yesterday as worries over Deutsche Bank (DE:DBKGn) sent funds to safe assets. German bund yield also dropped to -0.15, lowest in more than a month. Meanwhile, US 10 year yield extends recent fall to close down -0.033 at 1.556. That compares to September's high at 1.752 and August close at 1.568. Weakness in oil price was also seen as a factor for dragging down yields as Iran and Saudi Arabia poured cold water on hopes for an output freeze agreement in the informal OPEC meeting in Algeria today.
In US, Fed vice chair Stanley Fischer said that "with unemployment now below 5 percent we're beginning to see the fruits of a higher-pressure labor market." And he noted that 3% wage growth is "consistent with a reasonable rate of inflation" while wage growth is current at around 2.5%. But he didn't talk about the timing of the next rate hike. Fed Chair Janet Yellen will appear before the House Financial Services Committee today on supervision and regulation. And, Fed speakers Wednesday include Minneapolis Fed President Neel Kashkari, St. Louis Fed President James Bullard, Chicago Fed President Charles Evan, Cleveland Fed president Loretta Mester and Kansas City Fed President Esther George.
On the data front, Germany will release Gfk consumer sentiment in European session. Swiss will release UBS consumption indicator and KOF leading indicator. US will release durable goods orders.
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