As a preliminary gauge of sentiment we see that the major US equity indices yesterday closed well into negative territory, and that Asian counterparts have largely followed suit this morning.
Trigerring the sell-off were comments from corporate giants, the likes of Caterpillar, that in its reported earnings hinted that although results had indeed exceeded expectations, it expected this 1st Quarter to be the best compared to the rest of the year. In so doing implying that the rest of the quarters will somewhat be slower.
In the meantime concerns of slower economic growth were further exacerbated with 10-year treasuries’ yield hitting a 4-year high breaking above the key 3% level. Broken down this means that Treasuries are selling-off and in turn prices are dropping and inversely yields rise, as investors anticipate continued tightening from the Fed to counter rising inflationary pressures.
In the meantime on the currency markets we see the USD holding on this morning defending Monday’s highs and brushing off yesterday’s negative close. The heat map for the major currencies sees gains mostly around the USD and the GBP. The pound is attempting to distance itself from the lows seen last Monday.
Today’s economic docket is looking rather quiet with no major high impact data event expected you should expect prices to move in the direction of sentiment. Later today we have MBA mortgage applications
