Economist's Insights

Today’s Trading Activity – Intraday Volatility Across Various Asset Classes Fades to Leave Most Asset Classes Little Changed

Jan 10, 2018

There was interesting price action across assets classes on Wednesday. Starting with stocks, the Dow dropped approximately 130 points in the first half hour, spent most of the day climbing back to up 19 points, but ultimately faded by the close to end down 17 points, or 0.01%. The S&P followed a similar path to a daily decline of 0.11% and the Nasdaq slipped 0.14%. Longer Treasury yields were equally as volatile, with the 10-year yield jumping more than 5 bps overnight on news China was reconsidering holding U.S. Treasurys before rallying back after a solid 10-year auction. Despite the concerns about potentially less demand from China, indirect bidders – which ironically includes foreign central banks such as the PBOC – took down 71% of the auctioned amount, the largest share since August 2016. In other metrics, the bid-to-cover of 2.7x was the strongest since June 2016 and the awarded yield of 2.597% was the highest since July 2014. On the day, however, the dust settled with no part of the curve from the 2-year note and out changing more than 0.5 bp. The Dollar also sold off on the China report but slowly climbed back with the biggest jump following a headline that Canadian officials see a growing chance that the U.S. will pull out of Nafta. The White House responded by saying the President’s position on Nafta was unchanged. The Canadian Loonie was Wednesday’s worst performer.