Global bond yields jumped higher in reaction to growing prospects for a more aggressive monetary policy tightening by the Fed. Yesterday’s uber-hawkish comments by St. Louis Fed President James Bullard that the Fed could hike by 75 bps in May, has pushed the US Treasury 10Yr yield to 2.91%, its highest level since November 2018. German bund yields jumped 10 bps to 0.94% and UK gilts up 9 bps to 1.98%. Asian equities were mixed, but European equities were all lower and the US opened down small. The US dollar is higher on the back of the higher bond yields and by uncertainty related to Russian’s new offensive in Ukraine. The Japanese yen is approaching 129 vs the dollar and to its weakest level in 20 years. Oil and gold are slightly lower.
April 19, 2022
EUR/USD 1.0804 GBP/USD 1.3000 USD/CAD 1.2616 AUD/USD 0.7378 USD/JPY 128.61 USD/CNH 6.4129 USD/ILS 3.2392 USD/MXN 19.9333 USD/CHF 0.9467 USD/INR 76.5038 USD/BRL 4.6461 USD/SGD 1.3671 USD/DKK 6.8878 USD/SEK 9.5672 USD/NOK 8.8069
The dollar index has reached fresh 2-year highs on the back of soaring US Treasury yields and safe haven demand as Russia starts a new offensive in Ukraine. Commodity currencies are outperforming as the war impacts the supply of commodities. Housing data for March released this morning surprised on the upside.GBP
The UK pound continues to trade under $1.30, in line with broad dollar strength. PM Johnson is expected to apologize in Parliament for his breaking COVID rules, but the pound seems indifferent to politics. There were no economic releases for the UK today.EURThe euro continues to trade under $1.08, fueled by the more hawkish Fed versus the less hawkish ECB narrative coupled with the devastating economic impact from rising commodity/energy prices triggered by the war in Ukraine. There were no economic releases from the eurozone today.CAD
The Canadian dollar is little changed despite lower oil prices. Housing Starts for March were slightly less than expected and below February’s figure. Existing Home Sales declined by 5.4% after a 4.6% increase in February.ASIA/PACIFIC
The Japanese yen is lower for the 13th straight day, starting the month of April at ¥122 and now approaching ¥129. Bloomberg said it was the yen’s “longest tumble in 50 years.” Traders are ignoring Japanese officials’ comments of warning about the speed of the yen’s decline, and instead are focused almost exclusively on the widening spread between US and Japanese interest rates and bond yields.
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