From Marc Chandler at Bannockburn Global Forex:
Overview: Yesterday's poor 10-year note US Treasury auction helped turn the equity market lower and this carried over into Asia Pacific and European activity today. Today, Treasury completes its quarterly refunding with the sale of $25 bln 30-year bonds. The general tone in the foreign exchange market is one of consolidation. Japanese investors were buyers of foreign stocks on bonds last week, according to the latest portfolio flow report, which is not what one would expect if Japanese investors were repatriating assets and unwinding their natural carry trade. Foreign investors were sellers of Japanese bonds and stocks. India's central bank stood pat as expected. Several hours after Mexico's CPI is reported, the central bank meets, and the market seems split over the outlook. We expect Banxico to wait for next month to cut, given the uncertain outlook, rising headline inflation, and the weakness of the peso.
In Asia Pacific, only the Hang Seng rose among the large equity markets. Europe's Stoxx 600 is giving back a little more than half of yesterday's 1.5% gain, and US index futures are narrowly mixed. Bonds have rallied. Japan's 10-year yield fell almost five basis points to below 84 bp. European benchmark yields are 1-4 bp lower, and the 10-year US Treasury yield is about three basis points softer near 3.91%. Gold is trading quietly in about a $2380-$2400 range. September WTI approached $76 a barrel yesterday and is softer today straddling the $75 area....
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