Flight into the relative safety of the JPY, CHF and USD.
As the North American session gets underway, the JPY is the strongest and the CAD is the weakest. China’s Evergrande (the worlds most indebted property developer) likely default this week (on Thursday) sent the Hang Seng index down -3.3% on concerns that the potential financial markets stress may ripple through to other sectors of China’s (and global) the economy. European shares are sharply lower, as are the pre-market levels in the US. The FOMC board meets this week ahead of its rate decision on Wednesday with the Dow down over 600 points ahead of the open. Here we go again? Will the Fed be influenced by the equity markets risks on top of the other risks from Covid Delta variant, etc.? Canada has elections today. The NAHB housing market index will be released at 10 AM ET. Last month it came in at 75.
In other markets:
- Spot gold is trading up $4.50 or 0.26% at $1757.90
- Spot silver is trading down two cents or -0.09% at $22.34
- WTI crude oil are trading down -$1.95 and back below the key $70 level. The prices are down -2.7% at $69.89.
- The price of bitcoin is not escaping the market anxiety on fears of regulation. The price is currently trading down -$3561 and $43,683. The low price reached $43,190.
The US stock futures are trading sharply lower after last Friday’s declines:
- Dow, -640 points, after Friday’s-137.98 point decline
- S&P -70 points, after Friday’s -40.78 point decline
- Nasdaq, -230 points, after Friday’s -137.98 point decline
In the European debt market, the major indices are all down over 2%
- German Dax, -2.6%
- France’s CAC, -2.5%
- UK FTSE 100, -1.60%
- Spain’s Ibex -2.1%
- Italy’s FTSE MIB -2.6%
In the US debt market, the yields are sharply lower with the yield curve flattening. The 2– 10 year spread as moved back down to 110.4 basis points versus Friday’s close of 114.4 basis points.
In the European debt market, the benchmark 10 year yields are also lower across the board as the day react to slower growth potential and anxiety from the equity markets.