It seems like a lifetime ago, but on Monday, markets looked like they were on the brink of a catastrophe. Japan’s Nikkei 225 fell 12.4% on Monday, and analysts were trying to figure out where to place the circuit breakers. There was talk that the Federal Reserve would hold an emergency meeting and cut interest rates by 75 basis points. The market had confidently priced in 50 basis point cuts in September and November. Yields were also sharply lower.
But the ISM data didn’t come out that week, and markets stabilized. By the end of the week, the forex market had reversed its risk-on bias. U.S. yields erased the declines and moved higher. U.S. stocks nearly erased more than 3% of the declines in the S&P and Nasdaq, with both closing slightly lower.
In today’s trading, the US dollar closed with mixed performance, gaining against the Australian and New Zealand dollars and declining against the Japanese yen, the British pound and the Swiss franc. The US dollar was little changed against the euro and the Canadian dollar.
The USD/CAD pair was almost unchanged after today’s mixed employment data. The unemployment rate remained unchanged from last month. The employment change was negative by 2.8K jobs versus expectations of a 22.5K increase, but what makes it not bad is the increase of 61.6K full-time jobs. Part-time jobs saw a decrease of -64.4K jobs.
The Japanese yen was the strongest among major currencies today and the weakest against the Australian dollar.
During the trading week, the US dollar was mixed against major currencies. The US dollar rose against the Swiss franc and the British pound, but fell against the Canadian dollar, the Australian dollar and the New Zealand dollar as traders in risk-off/commodity currency markets recovered. The US dollar was little changed against the euro and the Japanese yen.
- euro:-0.09%
- GBP: +0.30%
- JPY: +0.11%
- Swiss Franc: +0.94%
- Almost:-1.02%
- Australian Dollar:-1.00%
- New Zealand Dollar:-0.79%
In the US debt market, the yield on two-year notes closed near its highest levels, while the yield on longer-term notes traded near its lowest levels for the day as the yield curve widened. Over the course of the week, yields closed higher after falling on Monday on recession fears.
- The yield on the two-year note was 4.059%, up 1.5 basis points. Over the week, yields rose 17.3 basis points.
- The yield on the 5-year Treasury note is 3.797%, -3.5 basis points. Over the week, the yield has risen by 18.0 basis points.
- 10-year yield 3.943%, -5.3bp. Over the week, yields rose 15.0bp.
- The yield on the 30-year Treasury note is 4.223%, -6.3 basis points. On the week, the yield is up 11.1 basis points.
Looking at other markets:
- Crude oil is trading at $77, up $0.81. During the week, the price of oil rose by 4.69%.
- Gold rose $4.30, or 0.17%, to $2,430.75. For the week, gold remained almost flat at -0.46%.
- Silver fell -9 cents, or -0.33%, to $27.44. For the week, the price fell -3.84%.
- Bitcoin is trading at $60,757. During the week, the price rose by $2,613 before the end of the week.
In US stocks, major indexes closed higher on the day, but while Monday’s sharp declines were not fully recoupable, most of the declines were recouped.
The S&P was closest to positive territory with a -0.04% decline for the week, and the Nasdaq closed down -0.18%.
Thank you for your support. Have a great weekend.