Bond yields sell off

This Daily Digest will cover:

• Bond yields sell off this morning

• Equities remarkably stable

• FX too quiet

• Crypto holds support first time round

This is not an easy piece to write in quiet markets as it can get repetitive but my spidey senses are tingling this morning despite the dull ranges. Bond yields are selling off this morning as they point to the uncertainty over economic policy. Equities are quiet but there are red flags flashing everywhere for me. Crypto has turned, and whilst the majors have held their supports for now the bounces are akin to me on a trampoline. Whilst earnings have been solid with 68% of companies meeting or beating expectations, the big dogs start today and any miss there could be the tipping point.

Putting this all together there is a case for adding some “risk off” positions. I have sold some Eur/Jpy late yesterday and have sold some equities this morning as a hedge to my long crypto.

Speaking of crypto, as I mentioned ETH and BTC both had a look at the primary support yesterday with 27,000 and 1800 holding. Bounces are weak so I expect a stronger test and a likely look at 1720/50 and 26,500. A break above 1880 and 28,000 is really needed to change the mood. Eur/usd tried to vault the 1.1070 level I mentioned yesterday but merely served to put a double top in place. I have mixed feelings about the next move so would prefer to buy a break higher rather than dive in at these levels.

As always, good luck.

Richard Usher
Head of OTC Trading