US rates moved sharply lower today as banking concerns along with hopes for a more dovish Fed next week, sent funds flowing into US treasuries.
Looking at the US treasury curve, the:
- 2 year: 3.387%, down -29.3 basis points
- 5 year: 3.504%, down -23.2 basis points
- 10 year: 3.439%, down -26 basis points
- 30 year: 3.627%, down -8.2 basis points.
For the week, the yields were sharply lower as traders reacted to the banking crises in Switzerland and the US. Today Silicon Valley Bank filed for Chapter 11 bankruptcy. Meanwhile First Republic, which rallied yesterday on the back of a syndicate of US banks depositing $30 billion into their bank, saw it’s price tumbled -32.8% or $11.24 to $23.03.
Looking at the changes in US debt yields this week
- 2 year -76 basis points. That is the sharpest one week fall since 2001
- 5 year -47 basis points. Sharpest week fall since 2008.
- 10 year -14.7 basis points
- 30 year -7.9 basis points
The 2-10 year spread this week steepened by 50 basis points to -39 basis points. That spread was as negative as -108 basis points last week. It was the biggest steepened her since 2001.
Looking at other markets there were huge moves in gold, silver, crude oil and Bitcoin this week:
- Gold today is trading up $65.99 or 3.45% at $1987.85. This week the price moved up $120 or 6.45% held by the sharply lower interest rates. The next target comes against the swing high from April 2022 at $1998.39. The high price for 2022 reach $2070.42.
- Silver is trading up $0.86 or 3.96% at $22.58. For the trading week, the prices up $2.06 or 10.07%. The gain of over 10% is the largest increase since August 3, 2020
- Crude oil fell $1.92 today at $66.43. For the week, the price fell $10.27 or -13.39% the decline is the largest since April 2020
- Bitcoin is trading at $26,846 and at the highest level since June 2022. For the trading week, the price is up $4652 or 20.97%. The price bitcoin is closing above its 200 week moving average for the first time since August 2022
In the forex today, the JPY is ending as the strongest of the major currencies, while the CAD is the weakest. The JPY benefited from flight to safety flows. The CAD was the weakest helped by lower oil prices and PPI data which was lower than expectations. The fall in PPI data is positive for future CPI.
For the trading week, the USD moved lower against all the major currency pairs with the exception of the a rise vs the CHF:
- The DXY fell -0.74%. The largest decline since January 9
Versus the major currencies, the USD had weekly changes of:
- EUR, -0.235%
- JPY, -2.39% (largest decline since January 9)
- GBP, -1.18%
- CHF, +0.46%
- CAD, -0.65%
- AUD, -1.79% (largest decline since January
- NZD, -2.06% (largest decline since November 2022)
The EURUSD still moved lower despite a 50 basis point hike by the ECB on Thursday. Next week both the Fed and the BOE will announce interest rate decisions.
Finally, in the stock markets this week, European shares fell sharply. In the US the NASDAQ index had a solid gain over 4%, but the Dow Industrial Average fell modestly. In Asia Pacific, China’s Shanghai composite index and Hong Kong’s Hang Seng index rose , but Japan’s Nikkei and Australia’s S&P/ASX index both fell over to percent
- Dow Industrial Average: -0.15%
- S&P index: +1.43%
- NASDAQ index: +4.41%
- German DAX: -4.28%
- France’s CAC: -4.09%
- UK’s FTSE 100: -5.33%
- Spain’s Ibex: -6.09%
- Italy’s FTSE MIB, -6.55%
- Nikkei 225, -2.88%
- Hong Kong’s Hang Seng index, +1.03%
- China’s Shanghai composite index, +0.63%
- Australia’s S&P/ASX index, -2.1%