Today’s Trading Activity – Stocks Sink, Euro Rises with European Yields on More Uncertainty around Central Banks’ Stances
Jul 6, 2017
The Euro rose Thursday as a sell-off in European sovereigns sent yields surging in another bad day for long positions in global sovereign debt. All signs Thursday were bearish for sovereigns. A weak auction of French government bonds started the selling. A hawkish line in the ECB’s June Minutes described a discussion about potentially removing a reference to re-ramping QE if necessary, furthering concerns about central banks beginning to back away from stimulus. A solid U.S. ISM non-manufacturing report also pressured sovereign yields. The 2-year Treasury yield settled 0.8 bps lower to 1.39% while the 10-year yield added 4.3 bps to 2.37%. The curve ended at its steepest since May 23. European stocks tumbled and the major U.S indices slumped and finished near session lows. The Nasdaq fell 1.0% while the S&P sank 0.9% and the Dow dropped 0.7%. Crude prices rose after data from the Department of Energy reported a larger-than-expected decline in U.S. crude and gasoline inventories, but fell back from session highs after the same report showed rebounding production.