As the North American session begins (and so does the week), the USD is the strongest and the AUD the weakest. The JPY and the CHF are also higher because “risk-off” sentiment controls forex flows today.
The FOMC will begin their two -day meeting on Tuesday (decision at 2 PM ET on Wednesday). The Fed will debate whether they will keep the taper where it is or speed things up (finish?) So they can tighten up sooner. The discussion on balance reduction can also be discussed.
U.S. stocks in premarket trading continued the downside trend after the Dow and S&P had their worst week since Oct. 20, 2020. The Nasdaq was the worst performer with a -7.53%decline. Russell 2000 traded at a 52 -week low. The Nasdaq is leading again today. Revenues scheduled to be released this week include IBM, Verizon, American Express, Microsoft, Boeing, Intel, Tesla, servicenow, MasterCard, McDonald’s, Apple, Chevron, and Caterpillar.
US yields were mixed with the short end up a few basis points while the long end was lower while the yield curve was somewhat flattened.
Tensions in Ukraine continue to intensify on the border. The US and UK have ordered the families of their diplomats to leave the country. The Biden administration is considering sending troops into the country.
The price of crude oil is going down a bit. There are reports in Iran that it is close to a nuclear disarmament agreement that could be good for the supply-side. Crude oil was down around $ 0.22 in early trading.
In other markets, the morning snapshot shows:
- Spot gold is trading $ 4.27 or 0.23% at $ 1838.58
- Spot silver dropped $ 0.25 or -1% to $ 24.02
- WTI crude oil was down $ 0.09 to $ 84.98
- Bitcoin has dropped and is currently trading at $ 33,377 and trading at its lowest level since July 23
In the premarket for US stocks, major indices trade less. All three major indices are trading down
- Dow industrial average -121 points after Friday -450.02 points decrease
- The S&P index dropped -23.5 points after a -84.79 point decline on Friday
- NASDAQ index -119 points after Friday -385.10 point decline
In European equity markets, major indices traded lower across the board as an area chasing the sharp decline in the US stock market afternoon session yesterday.
- German DAX, negative 2%
- CAC of France – -2%
- FTSE 100 -1.3% of the UK
- Ibex of Spain -1.9%
- Italy’s FTSE MIB -2.5%
The US yield is mixed as the yield curve widens further. Two years increased 2.1 basis points while 30 years decreased -0.5 basis points and 10 years decreased -1.0 basis points. Investors are worried about slower growth as the Fed tightens. The FOMC will meet this weekend to decide on the continuation of policy including taper, balance sheet, interest rates.
In the European debt market, the benchmark 10 -year yield has dropped overall. The yield of the German tenure after the point with the parity level last week dropped -0.089%.
