Volatility has returned as foreign exchange and equity markets fight for positioning amid the recent “bond rout.” The euro hit a ten week high overnight, tracking European bond yields higher and benefiting from another sell-off in the US dollar. Trade remains unstable on Thursday, one day following comments from Fed Chairman Yellen who warned of high equity valuations. Thursday is election day in the UK and the results are anyone’s guess. David Cameron’s Conservatives are in a dead heat with Ed Milliband’s opposition Labour Party, indicating neither will win enough seats for an outright majority in the 650-seat parliament. The pound lost a little ground early on but has since recovered and is trading steadily.Tomorrow, the US releases its April jobs report which is hotly anticipated following March’s very poor result of only 126k new jobs.
The Asian markets kicked off with Australian employment figures for April. Employment fell 2.9k versus expectations of 4.0k, but past revisions were higher and the unemployment rate jumped to 6.2%. The Aussie dollar rose nearly 1% following the reports, tracking other major currencies on this most recent advance on the greenback. It was an otherwise quiet trading session, even into European hours. Global equities are all tracking lower despite this bit of news as markets remain extremely unsettled as weeklong sell-off in government bonds shows no signs of letting up.
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