US Consumer Confidence slumps, Stocks fall; Risk-off
Summary: The Dollar Index, which gauges the value of the Greenback against a basket of 6 major currencies extended its rally, breaking above 106 to 106.15 (105.55 yesterday).
Risk aversion following a steep fall in US Consumer Confidence to 103 from an upward revised 108.7 previously, weighing on sentiment. US New Home Sales fell to 675K from 739K.
US Treasury Bond yields soared with the benchmark 10-year rate up to 4.54% from 4.43%, a 16-year high. The two-year US yield rose to 5.12% (5.11%). Minneapolis Fed President Kashkari said one more rate increase was needed after US Consumer prices rose in August.
Other global bond rates rose but to a lesser extent. Germany’s 10-year Bund yield settled at 2.80% (2.74% yesterday). The UK 10-year Gilt rate was up 8 basis points to 4.32%.
Against the yield sensitive Japanese Yen, the US Dollar rallied to 149.10 (148.37), highs not seen since November 2022. The Greenback edged closer to the 150 JPY level, even as Japanese Prime Minister Kishida told his cabinet to prepare a new economic package to cushion inflation’s rise.
The Euro (EUR/USD) dipped further to 1.0562 (1.0655 yesterday) an overnight and fresh six-month low. Sterling slid 0.48% to 1.2153 from 1.2253 weighed by broad-based US Dollar strength.
The Greenback rose against the Asian and Emerging Market Currencies. Against the Offshore Chinese Yuan (USD/CNH), the Dollar jumped to 7.3120 from 7.2985. USD/THB ratcheted higher to 36.40, up from yesterday’s 36.00.
Wall Street fell, leading global stocks lower. The DOW slumped 1.19% to 33,670 (33,980) while the S&P 500 settled at 4,282, down from yesterday’s 4,322.
Other economic data released yesterday saw Germany’s IFO Business Climate rise to 85.7 in September, matching August’s climb, and higher than estimates at 85.2. UK CBI Realized Sales improved to -14 in September from -44 in August, and better than expectations at -33.
