January 29, 2023

Forexlive Americas FX news wrap: Yields and stocks move higher and so does the USD

The first day of the year was a quasi-holiday in that some countries were off celebrating “the Monday after the 1st of the year” holiday. Italy, Canada and the UK were officially off. The US banks and federal offices were also off, but the US stock and bond markets were open (as were the futures markets).

The stock and bond markets both saw fairly robust moves in the first day.

  • Both the S&P and Dow closed at record levels
  • The Nasdaq closed higher for the first day in 5 and rose 1.2%
  • European indices also moved higher, led by the end of the Italian FTSE MIB

US and European indices close higher

In the bond market, the yield soared with the yield curve steepening as traders prepare for stronger growth and inflation in 2022. The Fed is expected to tighten three times by the end of the year (from the current 0.25% target rate).

The 10 year yield is up 13.5 basis points and the 30 year yield is up 14.1 basis points. The two – 10 year spread surged to 85.9 basis points from 76.6 basis points at the close on Friday. The rise in yields helped the financial stocks today.

US yields

US yields moved sharply higher

Higher yields helped to propel the US dollar to the strongest of the major currencies. The gains in the greenback were the strongest versus AUD and the CAD (they were the weakest).


The strongest to weakest currencies at the end of the day

In other markets:

  • Spot gold is trading down around $28 or -1.55% at $1800.55
  • Spot silver is down $0.40 or -1.77% at $22.87
  • WTI crude oil is trading up $0.84 at $76.05
  • Bitcoin is trading down $1200 at 46,065

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