Markets had experienced a relatively good start to the day yesterday after strong data out of China let to an optimistic reaction in risk trades during the Asian session. However, once again another strong data print in the US, this time raw materials, pricing led to the usual reaction as the market priced in higher rates. The US 10-year treasuries, back to multi year highs near 4% and the 2-year hitting levels not seen since 2007. Despite this the dollar remained on that back foot within recent ranges against most of the majors. US stock indices once again finished the day in the red and Asian bourses look set to take their lead and open to the downside.
Markets are turning swiftly on data releases in the current environment and the next raft of key economic indicators could set the tone for the coming quarters. Stock markets are in effect still trading at relatively inflated levels whereas the bond markets are pricing in higher rates and therefore more depressed trading conditions. Investors are flipping between the two on an almost daily basis making it very hard to jump on short-term trends and until we get a stronger picture from upcoming releases expect these trading conditions to continue.
Looking ahead at today’s market activity and there are mainly tier 3 data releases due across the trading sessions. Traders will be paying close attention to the CPI numbers out in the European session and the weekly unemployment claims numbers are also due later in day once the North American session starts.
