Markets Columnist @Reuters
The Good Day Sunshine State
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Japan leads the Asia-wide stock market recovery charge from Monday's selloff
Monday - Nikkei 225 index -12.4%, second largest fall on record
Early Tuesday - Nikkei 225 index +10 .3%, on track for third largest rise on record.
A sign that Monday's volatility was way overdone?
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"Up the escalator, down the elevator shaft" - not dollar/yen, but US interest rates. Fed hiking cycles are often gradual - "measured pace", anyone? - but not easing cycles. This time is no different.
COLUMN-Gradual Fed rate cut hopes were always misplaced
reuters.com/markets/us/hopes…
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Jamie McGeever retweeted
woah, maybe the US economy is not crashing?
ISM services employment up 5 points to 51.1. Entire PMI in expansion
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VIX volatility index - Wall Street's 'fear index' - surges above 65, its highest ever except for global financial crisis in 2008 and pandemic in 2020.
Higher than peaks of Asian crisis, LTCM, dotcom crash, 9/11, taper tantrum, US debt downgrade, Volmaggedon.
Panic or justified?
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Japanese stocks tumbling. The broad Topix index is down 7% and on track for a two-day fall of 13%.
That would be the fourth biggest two-day fall in almost 50 years, topped only by:
Oct 1987 (Black Monday)
Oct 2008 (Great Financial Crisis)
March 2011 (Fukishima disaster)
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Carry trades getting clobbered - Japanese stocks, dollar/yen, Nasdaq futures and crypto all posting heavy losses as Friday's 'risk off' momentum spills into early Asian hours Monday.
Topix -7%
USD/JPY below 145.00
Nasdaq futures -2.5%
Ethereum -15%
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CFTC data shows that as of Tuesday, asset manager long & hedge fund short US Treasury futures positions rose to new records worth $1.12 trln and $1.08 trln.
Yield collapse since Thursday - 45 bps in 2y, 30 bps in 10y - will be hurting some of these highly leveraged funds.
Remember the basis trade? Record asset manager, hedge fund US Treasury futures positions of >$1 trillion not a problem if vol is low, rate changes are gradual. They may be vulnerable...
COLUMN-US Treasury futures in unchartered waters as Fed cuts loom
reuters.com/markets/us/us-tr…
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Remember the basis trade? Record asset manager, hedge fund US Treasury futures positions of >$1 trillion not a problem if vol is low, rate changes are gradual. They may be vulnerable...
COLUMN-US Treasury futures in unchartered waters as Fed cuts loom
reuters.com/markets/us/us-tr…
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Bad U.S. jobs numbers - affirms economic slowdown, will fuel recession talk and need for bolder rate cuts.
Unemployment rate up to 4.3%, higher than expected
Payrolls +114k in July, less than expected
June payrolls revised down
Wage growth slows more than expected
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Jamie McGeever retweeted
NEW
The Conservatives have just set an all-time record in the number of deposits lost at this election. They’re up to 30 and counting, beating their record of 28, from the Oct 1974 election…
* candidates forfeit a deposit if they fail to win 5% of the vote
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UK election exit polls suggest Labour win a landslide victory. Tories massacred, projected to be their worst result in nearly 200 years.
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UK polls point to 'electoral extinction' for the Tories, with one indicating they'll win just 72 seats, the lowest in their nearly 200-year history.
reuters.com/world/uk/uk-poll…
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Fed raises median long-term neutral rate projection to 2.8% from 2.6%. That's the highest since Q1 2019, and the biggest increase since the Fed started publishing median l/t fed funds forecasts nine years ago.
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