Disappointing inflation and retail sales data has sparked a surge in safe-haven demand for bonds and bullion, and left stocks confused this morning ahead of The Fed statement and press conference this afternoon...
A disastrous morning for US macro data - and yet we are assured by The Fed that a hike is overdue and everything is awesome...
It's not!
Gold and Bonds are well bid...
Pushing 10Y yield to its lowest since Nov 10th...
And Nasdaq jumped on the dovish-inspiring data dump...
USD has been hit with a double whammy, with both retail sales and inflation firmly weak. Price action has been rather brutal, most notably in fixed income. The whole treasuries curve has been hit, with US 2y yields slipping from 1.35 to the 1.31 handle. US 5y yields have similarly slipped to just 1.723%. The spillover has been felt in Europe too.
The move has been echoed in FX. USDJPY is down 70 pips to 109.60 while EURUSD is up almost 50 pips to 1.1250. USDCHF has entirely retraced earlier gains and G10 commodity currencies have found a further bid – AUDUSD is now at 0.7600 while NZDUSD trades at 0.7273. NOK and SEK are also finding bids here. Even GBP is managing to pick itself up, all things considered.
USDJPY at 2mo lows...
The Dollar Index has crashed to the lowest since October 3rd... Today's drop is the biggest since The Fed hiked rates in March.
This price action might continue into the FOMC - the weakness of the data is hard to argue with.