ORLANDO, Florida, Feb 12 (Reuters) – Market sentiment soured rapidly on Thursday, sparking a steep selloff in U.S. stocks, precious metals, commodities and cryptocurrencies, as investors flocked to the relative safety of Treasuries, the dollar and Swiss franc.
In my column today, I ask the simple question: what will it take for the Fed to raise rates? Officials and market pricing are still leaning towards further easing, but the case for the next move being a hike is just as strong. Maybe stronger.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
Today’s Key Market Moves
Today’s Talking Points
* Fragile and volatile
Selling begot selling on Thursday, leading to sharp falls on Wall Street and a renewed wave of liquidation in assets that had been pumped up by frenzied speculation in recent months like gold, silver and bitcoin.
Worries over AI’s impact on software companies surfaced anew, but there was no clear trigger. This is significant, as it shows how fragile sentiment is, and how stretched positioning still is in certain markets. Perhaps one reassuring element of the shake-out is Treasuries and other government bonds fulfilled their traditional role as the safe-haven of choice.
* Going long the long bond
Thursday’s $25 billion auction of 30-year U.S. bonds was historic. Bid-to-cover of 2.66 was the highest since January 2018, the 4.75% high yield was 2 bps below the prevailing rate at time of issue, and primary dealers’ take of 5.9% was the lowest since at least 2008, according to Exante Data.
Little wonder the 30-year yield tumbled 9 bps, its biggest daily drop since October. Does this suggest dealers expect a soft CPI print on Friday? Or fear wider “risk-off” market turbulence? Maybe. What it does show is there’s life in the long bond yet.
* U.S.-China tensions thaw ahead of summit
Presidents Donald Trump and Xi Jinping are expected to meet in Beijing in early April, and if current signals are accurate, it will be a cordial summit that could thaw tensions between the two superpowers and ease global trade pressures.
Washington has shelved a number of key tech security measures aimed at Beijing, the yuan is trading at three-year highs against the dollar, and reports suggest the two leaders may extend a trade truce for as long as a year. As U.S. Treasury Secretary Scott Bessent said this week, U.S.-China relations are “in a very comfortable place.”
What could move markets tomorrow?
Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Jamie McGeever; Editing by Nia Williams)
Comments