Markets:
- Gold up $12 to $2035
- US 10-year yields down 6.7 bps to 4.51%
- S&P 500 up 2 points to 5088
- WTI crude oil down $2.06 to $76.55
- AUD leads, CAD lags
Friday’s US economic calendar was completely bare and if you look at the closing levels in FX, there is hardly any movement to be seen. But under the surface it wasn’t so quiet as we saw some strong USD selling in Europe that was countered in early North American trade before markets chopped sideways late.
It wasn’t clear what was driving any of the moves today, aside from oil selling on Gaza ceasefire hopes. Equities got some early bids on the FOMO follow through from yesterday’s huge rally but by the time of the European close, that gave way to profit taking and stocks finished flat.
The mystery was in bonds where the long-end was strongly bid. US 30-year yields fell 9.3 bps and finished on the lows and the lowest close since Feb 12. If there was some kind of geopolitical bid, you would expect oil to have moved in the opposite direction but with Gaza inching towards peace, that was hard to see.
One theory surrounded a German bank with exposure to US commercial real estate. That will be something to watch over the weekend, as bunds were also strongly bid. I’m sure we haven’t heard the end of the saga regarding the debts around emptying offices.
Perhaps there is something else going on or flows were dominating but I’ll be keeping a keen eye on whatever was driving the bid in bonds and (to a lesser extent) gold.