Here are the major headlines from today’s financial markets:

  • 10-Year Treasury Yields Hit Cycle High: 10-year Treasury yields hit another cycle high on Wednesday, just shy of 4.9%. This is driven by a number of factors, including strong US economic data, rising inflation expectations, and ongoing issuance from the US Treasury.
  • RBNZ Fails to Live Up to Hawkish Expectations: The Reserve Bank of New Zealand (RBNZ) raised interest rates by 50 basis points on Wednesday, as expected. However, the RBNZ’s tone was more dovish than some investors had anticipated, which put pressure on the New Zealand dollar (NZD).
  • Yesterday’s US JOLTS Job Openings Beat Expectations: US job openings rose to 9.6 million in August, beating market expectations of 8.8 million. This suggests that the US labor market remains very strong, despite rising interest rates.

The main focus for yields right now, in the short-term at least, remains on the very important incoming US data like the ADP employment report, ISM services PMI, and Friday’s non-farm payrolls report. These reports will provide further clues about the strength of the US economy and the Federal Reserve’s monetary policy outlook.

Broader markets started the session with a more risk-off tone, but a slight pullback in yields has seen a very marginal bounce in equities. Even though traders are getting itchy fingers to buy gold, it is best to wait for the US data to give the green light. Having the right catalyst is very important for a possible bottom.


In FX, the AUD is leading the major currencies to the upside, but catalysts for strength are not clear. The NZD is the weakest of the majors following the RBNZ not opening the door to another possible hike.


The main highlight for today will be the US ADP and US ISM Services PMI. With yields very close to new cycle highs and the USD having seen 11 weeks of straight gains, the risk-reward of chasing them higher at these levels is not attractive, even if the data comes in better-than-expected.


The other asset to watch is gold, as a big miss in the data could give gold a decent nudge higher if both the USD and yields pull back a bit.


The one asset that could be interesting to trade on a really big beat in the JOLTS data is equities, which could see some extension to the downside if the data should surprise meaningfully to the upside.


If chasing equities on the short side doesn’t look attractive at the time, then consider waiting for USDJPY to push into 150 on a very big beat in the US data and then looking for possible signs of more MoF intervention to try and take advantage of additional downside in JPY pairs.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

All trading carries risk.