Market Brief: Yield Curve Inverts, Panic Ensues
Matt Weller, CFA, CMT August 14, 2019 9:01 PM
See a summary of the top market themes and trends from today's US trading session!
- FX: Currency market volatility was relatively constrained given the sharp moves in US equity markets. The safe haven Japanese yen and Swiss franc were the strongest major currencies, while the risk-sensitive commodity dollars (aussie, kiwi, and loonie) were the weakest.
- In addition to the yield curve inversion (see below), an outright contraction in German Q2 GDP and weaker-than-expected Chinese Industrial Production figures raised fears about the macroeconomic environment. Continued tweets from President Trump criticizing the Federal Reserve did little to reassure traders.
- Commodities: Gold gained nearly 1% on the day while oil (WTI) shed about 3.5%
- US indices reversed yesterday’s gains and more as traders panicked after the 10yr-2yr yield spread inverted, leading to one of Wall Street’s worst days of the year (-3% for major indices).
- All eleven sectors fell on the day, though Utilities (XLU) held up the most. Energy (XLE) was the biggest loser on the day.
- Stocks on the Move:
- Shares in retailer Overstock.com (OSTK, -23%) are in freefall after the company’s CEO espoused conspiracy theories about a “deep state” plot against him.
- Previous IPO darling Luckin Coffee (LK) dumped 17% after reporting downbeat earnings.
- Marijuana firm Tilray (TLRY) shed 15% on disappointing earnings.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.