Greece may be on the verge of a Grexit, crude may be taking out all key technical support levels, and US stocks will still close higher. But let the USDJPY slide and watch as the levitation ends with a bang. And tumble overnight is precisely what the USDJPY did, pushing not only the Nikkei lower by 1.6% but also leading to what is shaping up to be an unrecord, also known as red, open in the S&P – this surely calls for a “Markets in Turmoil” flashing siren on the 9th floor of the New York Fed.
Why? it is unclear what caused the drop: was it just a delayed reaction to yesterday’s market unmoving events out of Greece and commodity land, but several billion in option expirations pinned around 120 certainly helped. Just add an extremely illiquid market and watch how a determined seller can move the pair by over 100 pips in a few hours.
As a result European shares remain lower with the oil & gas and telcos sectors underperforming and travel & leisure, retail outperforming. Crude oil falls to 5-year low, ruble swings between gains and losses. Greek 10 year bond yield rises for second day. Italy sells 10-year debt at below 2% yield for first time on record. The French and Spanish markets are the worst-performing larger bourses, the Swiss the best. The euro is little changed against the dollar. Italian 10yr bond yields fall; Spanish yields decline. Commodities decline, with natural gas, Brent crude underperforming and zinc outperforming. U.S.
Market Wrap
- S&P 500 futures down 0.3% to 2080.6
- Stoxx 600 down 0.5% to 342.5
- US 10Yr yield down 1bps to 2.19%
- German 10Yr yield up 0bps to 0.55%
- MSCI Asia Pacific down 0.5% to 137.7
- Gold spot up 0.3% to $1187.3/oz
FX/BONDS
- Euro up 0.06% to $1.2159
- Dollar Index down 0.17% to 90.04
- Italian 10Yr yield down 9bps to 1.89%
- Spanish 10Yr yield down 8bps to 1.6%
- French 10Yr yield down 0bps to 0.83%
COMMODITIES
- S&P GSCI Index down 0.5% to 422.1
- Brent Futures down 0.8% to $57.4/bbl, WTI Futures down 0.7% to $53.2/bbl
- LME 3m Copper up 0.3% to $6310/MT
- LME 3m Nickel down 0.6% to $14955/MT
- Wheat futures down 0.6% to 611.5 USd/bu
