Headlines:
Markets:
- JPY leads, AUD lags on the day
- European equities down ~3% across the board; S&P 500 futures down 3.2%
- US 10-year yields down 7.7 bps to 3.719%
- Gold down 2.4% to $2,384.72
- WTI crude down 1.9% to $72.13
- Bitcoin down 11.5% to $51,445
It’s a crushing day for risk trades as we see a full-fledged flight to safety across markets. The unwinding of the carry trade continues with the Japanese yen surging higher again, taking the Nikkei down with its worst-ever drop since 1987. At the lows today, USD/JPY dropped by a whopping 470 pips to 141.70 before holding around 142.80 now – still down 2.5% on the day.
The other key beneficiary in FX was the Swiss franc. EUR/CHF briefly broke its late December and early January lows under 0.9300 before keeping thereabouts now, down 0.5% on the day. As for USD/CHF, the pair is down 0.8% to 0.8500 to its lowest since January.
The greenback is sitting more mixed, holding lower against the euro, yen, and franc while trading higher against the pound, aussie, and kiwi. The aussie is the biggest loser amid the risk rout with AUD/USD down 1.1% to 0.6440. The low earlier touched 0.6350.
Besides that, bonds are the only other thing is bid with 10-year yields in the US falling further as the yield curve inversion is nearing a close.
As for equities, it’s one-way traffic with the selling pressure in the handover from Asia to Europe before settling down a bit. But it’s not really abating with S&P 500 futures down near the lows currently still. Tech shares are bearing the brunt of the declines, with Nasdaq futures down nearly 5% but it was much worse earlier.
It’s a sell everything market with precious metals also sliding on the day. Gold is down over 2% under $2,400 again with silver down close to 7% in a fall to $26.62 at the moment – its lowest since May. In that lieu, copper futures have also broken back below $4 per pound and is threatening its 100-week moving average now at $3.92.
The pain is everywhere today and the bleeding will stop when it stops. Another reminder to the old adage, never catch a falling knife. Be careful out there and manage your risk/positions well. This is no time to be a hero and to be picking bottoms. Just remember that taking no trade is also a position in its own.
