Volatility has spiked sharply in yesterday session which saw stock indices collapse across the globe . Analysts have said that the markets became concerned about the pace of interest rate rises by the Fed , while also being uneasy with the potential for trouble with the US/China trade dispute if retaliation gets out of council. The major problem with the trade dispute so far is that it has weakened China , and there economy was already weakening , and this may lower global demand for commodities and Chinese investment.
The key thing with this correction is that it was mainly confined to stocks , with only a small move seen in bond yields , and a steady decline in the USD. Pricing seen in futures this evening has been very week but maybe the worst is over.
The CPI number came out weaker than expected at 0.1% m/m and 2.2% y/y which will reduce the pressure on the Fed to raise rates asap. 10 year bond yields have fallen from a peak of 3.26% last week to now at 3.15% with some safe haven buying seen. i would think if this correction is nearly over then the bond yields should range between 3.10-3.25% over the next few months.
The US dollar move lower has continued after the CPI and the Trump comments which I feel are just said to provide someone to blame if the stockmarket performance gets worse.
Latest pricing :
Dow Jones 25450 down 160 / S&P500 2776 down 10 / Nasdaq100 at 7022 down 27.
EUR 1.1565 up 48 / GBP 1.3229 up 40 / JPY 112.28 flat / DXY 94.83 down 35