Yields Continue to Drive the Action

Market Overview 

Muted start to trade for Europe with the FTSE 100 up about a third of a percent and the DAX trading flat. Basic resources and utilities are being hit hard by rates melt up, with financials, health and energy performing well. Yesterday saw some tentative gains at the open quickly erased as yields continued their upwards trajectory. Wall Street was flat yesterday, the Russell 2k (Main Street) slipped 1.6% yesterday to go negative for 2023.  Hong Kong sank overnight in catchup trade, whilst mainland China remains closed for a holiday.  

Yields Yield; Oil Slips 

Yields continue to pop and break higher with the US 10yr yield north of 4.7% for a new 16-year high, gold continues to ship ground at $1,824, heading it seems to test the Feb/Mar lows at $1,805. Oil has also come off further from the highs to hit a three-week low. The dollar continues to catch bid with DXY at its best in a year above 107. USDJPY close to 150 and on intervention watch. JOLTS job openings later seen at 8.81m – hors d’oeuvre ahead of the ADP and NFP later this week. 

The Fed's Big Talkers 

A raft of Fed speakers did the rounds. Loretta Mester of the Cleveland Fed went for higher - 

Fed vice chair Michael Barr stressed longer - 

Fed governor Michelle Bowman couldn’t decide and pushed for higher and longer -

RBA Holding the Line 

The Reserve Bank of Australia left rates unchanged for the fourth straight month, but indicated there could be more hikes in the can. The statement said: “Inflation in Australia has passed its peak but is still too high … The recent data are consistent with inflation returning to the 2–3 per cent target range over the forecast period… Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data.”  

Market Notables Today... 

Boohoo shares sank 9% as revenues were worse than expected, down 17%. Tough environment still stalking...FY seen –12% to –17%, down from –5% to flat guidance previously. More momentum in sales growth required.   

WTI – testing the first Fib level for support 

FTSE 100 – clinging to the 7,530 Fib levels