From Marc to Market:
Overview: Federal Reserve Chair Powell said that although confidence has risen that inflation is on course back to 2%, the Fed is not quite confident enough to cut rates. The market effectively eased for it. Since the FOMC meeting began on Tuesday, the two-year US yield tumbled from 4.40% to 4.10%. The US 10-year yield settled below 4% for the first time in six months. The risk-off spurred by the weaker than expected US manufacturing ISM helped lift the greenback against most foreign currencies despite the drop in US rates. The dollar is mostly softer today, the Canadian dollar and Mexican peso have fallen to new lows for the year. On the other hand, the risk-off mood and unwinding of carry trades are helping the Chinese yuan to have its best week of the year (onshore yuan ~+0.6%).
However, the meltdown in equities continues, with dramatic losses in the Asia Pacific region, led by more than a 6% decline in Japan's Topix, 4.4% loss in Taiwan, 3.6% drop in South Korea, and a 2.1% fall in Australia. The Hang Seng shed nearly 2.1% and China's CSI 300 fell 1%. Europe's Stoxx 600 is off almost 1.6% after dropping 1.2% yesterday. In the futures market, the S&P 500 is down more than 1% and the Nasdaq is off about 1.8%. Bonds are rallying. The 10-year JGB yield fell nearly 10 bp to 0.93%. European 10-year benchmark yields are mostly 1-3 bp lower. The US 10-year yield is three basis points softer, slightly below 3.95%. Gold reached a new high for the week ($2468.50) and is closing in on the record high set in mid-July near $2484. Middle East tensions notwithstanding, September WTI was turned back from almost $79 yesterday and fell to nearly $76. It is trading in a $76.60-$77.30 range today.
Asia Pacific...
....MUCH MORE
Here are the futures on the DAX and Nikkei over the last three months:
