Economist's Insights

Today’s Trading Activity – Tech Sinks Stocks, Euro Sinks the Dollar, Sovereign Yields Rise on Hawkish ECB Talk

Jun 27, 2017

Overnight losses in European stocks and rising European sovereign yields proved prescient indicators for moves in U.S. assets on Tuesday. The Nasdaq led the way lower again and tech companies were the biggest drag on the Dow and S&P. The S&P dropped 0.8% as the Dow fell 0.5%. Financial companies were the only sector to finish in positive territory in the S&P. Stocks lost some momentum after the Fed’s Fischer commented on valuations but made the biggest lunge lower after Senate leadership announced it was postponing a health care vote until after the July 4th holiday. The daily path for the Dollar and Treasury yields was well established ahead of the U.S. session after hawkish comments from ECB President Draghi boosted the Euro and lifted European sovereign yields. The Dollar sank more than 1% as the Euro moved to its strongest level against the greenback since August 2016. The 2-year yield increased 2.0 bps while the 10-year Treasury yield rose 6.6 bps to 2.20% after the German 10-year note added 12.5 bps. Between 2s and 10s, the curve experienced its greatest single-day of steepening of 2017.