From Marc Chandler at Bannockburn Global Forex:
Overview: The persistent rise in US rates continues to help fuel dollar gains. The euro has been sold through $1.08 and the greenback has jumped over 1% against the yen to JPY152.75. It finished last week closer to JPY149.55. So far, Japanese officials have been fairly quiet, but this seems likely to change. The US two-year premium over Germany has widened by around 65 bp since late September to return to levels that prevailed in June. The greenback is firmer against all the G10 currencies, but sterling, which is straddling unchanged levels. Emerging market currencies are weaker today.
The US 10-year yield is up a couple of basis points to 4.23%, while European benchmark yields are mostly 1-2 bp lower. The 10-year Gilt is an exception, and its yield is up almost four basis points to almost 4.20%. More dramatic moves are at the shorter end of the curve in Europe where two-year rates are off mostly 4-6 bp today. The two-year Gilt yield is up two basis points to nearly 4.09%. There is more speculation about a 50 bp cut from the ECB in December, but the swap market is little changed from yesterday, reflecting a little less than a 45% chance. Meanwhile, Chinese, Hong Kong, South Korea, and Australian equities rallied in the Asia Pacific region. We note that the weakness in the yen is not sparking demand for Japanese equities as it appeared to earlier this year. Europe's Stoxx 600 is off for a third day, and US index futures are nursing small losses. Gold continues to rise alongside the dollar and US rates. It set a record high today near $2758.50. Lastly after jumping around 4.5% over the past two sessions, December WTI has comes back softer. It is slipping below $71 after poking above $72 a barrel yesterday....
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