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European Rally Fizzles, S&P Futures Turn Red As USDJPY Slides, Bunds Strongly Bid

Wednesday, February 22, 2017 9:44
% of readers think this story is Fact. Add your two cents. / by Tyler Durden / Feb 22, 2017 6:38 AM

What started off in familiar fashion, with Asian stocks rising, and Europe hitting multi-month highs and US futures in record territory has stumbled in recent minutes following a continued rush for safety in short-dated German Bunds (the 2Y is now trading at -0.92%) and ongoing selling in the USDJPY, which has pushed Stoxx 600 back to unchanged, and S&P futures to modestly red for the session.

The exact  catalyst is unclear although traders are citing continued French political risks, as the recent OAT selloff continued this morning on Le Pen fears.

Earlier in the session, global stocks hit record highs on Wednesday, pushing gains for the year above those for all of 2016, while the dollar rose before Federal Reserve minutes that will be scoured for clues on the timing of the next U.S. interest rate rise. MSCI’s main index of global stocks, which tracks share prices across 46 countries, hit a second successive record high. It has risen some 5.7 percent so far this year, beating the 5.6 percent gains of 2016. The MSCI Asia Pacific Index was at the highest level since July 2015 as Chinese shares traded in Hong Kong resumed a rally. Japanese equities managed to end higher even after fluctuations in the yen pressured the Topix.

European shares followed Asian bourses higher, buoyed by all main indexes on Wall Street touching record closing highs on Tuesday with Britain’s Lloyds Banking Group was up 3 percent after reporting its highest full-year profit in a decade, although that early optimism appears to have faded.

As a result, markets painted a mixed picture of investor sentiment on Wednesday, as political risk sent both the euro and German two-year bond yields lower while global equities tracked a U.S. rally. The dollar edged higher before the release of Fed minutes, up 0.3% at 101.64, gaining against the euro and sterling, pressuring oil lower.

The day’s most anticipated event for markets will be the release of the minutes of the Fed’s last policy meeting. Fed Chair Janet Yellen said last week it was likely the central bank would need to raise rates at an upcoming meeting. Markets have priced in only a slim chance of a rise next month but a much greater likelihood in May or June. The dollar rose 0.2 percent against a basket of major currencies and 0.3 percent versus the euro.


The post European Rally Fizzles, S&P Futures Turn Red As USDJPY Slides, Bunds Strongly Bid appeared first on Silver For The People.


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