Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Opening Bell: U.S. Treasurys, Futures Sell Off On Trade Risk; USD Pops

By (Pinchas Cohen/ OverviewOct 09, 2018 06:30
Opening Bell: U.S. Treasurys, Futures Sell Off On Trade Risk; USD Pops
By (Pinchas Cohen/   |  Oct 09, 2018 06:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
  • Global stocks take a hit from heated US-China dispute over currency devaluation, persistent EU headaches

  • IMF cuts global growth outlook for the first time since early 2016

  • WTI bulls eye $77 peak

Key Events

Global stocks were mixed on Tuesday, with European shares crawling higher at the open, then slipping into red territory. Futures on the S&P 500, Dow Jones and NASDAQ 100 hovered more markedly in the red, weighed down by re-ignited worries of an escalation of the US-China trade war. Meanwhile, US Treasurys resumed their selloff, pushing the yield on 10-year bonds to fresh 7-year highs, pressuring risk assets yet further.

Miners and oil shares helped the STOXX 600 start Tuesday's session 0.11 percent higher, while a rebound in Italian stocks after yesterday’s sharp fall lifted the FTSE MIB 0.3 percent higher at the open. However, the index not only eased from an early 0.83 percent high, but quickly joined the broader pan-European benchmark in a relatively steep descent.

Earlier, during the Asian session, the Shanghai Composite consolidated with a 0.17 percent gain after yesterday’s 2.78 percent plunge—the worst in more than three months—when traders chose to focus on deepening diplomatic tensions with the US rather than on increasingly attractive stock valuations. The yuan rebounded 0.11 percent after yesterday’s 0.9 percent slide. However, the currency failed to cling to an earlier 0.3 percent gain.

Senior US officials reportedly voiced concerns over China's recent currency devaluation—as much as 9 percent against the dollar—warning they are watching closely for further developments after the People's Bank of China set the weakest daily yuan fixing rate in 17 months on Tuesday.

JPY/USD vs Nikkei 225 Hourly Chart
JPY/USD vs Nikkei 225 Hourly Chart

In Japan, the strengthening yen also impacted equities, with stocks of the Nikkei 225's export-reliant firms slipping 1.34 percent lower on aggregate. The yen’s advance then turned into a drop, but it was too late to help Japanese shares gain ground.

Global Financial Affairs

Yesterday's US session saw traders buy into significant early declines. Except for the Dow which closed higher, all major indices closed in the red for the third straight day. As well, it was mainly defensive shares that led the climb, which is not a bullish indication.

The S&P 500 gave up 0.4 percent. Consumer Staples (+1.38 percent) led gains, followed closely by Real Estate (+1.29 percent), demonstrating that the recent selloff was prompted by fears that rising interest rates would depress property valuations and cause mortgages and loans to become unaffordable. Utilities (+0.84 percent) came in third. On the opposite side of the spectrum, Technology (-1.13 percent) was the obvious catalyst for the benchmark's overall decline. Technically, the SPX found support by the August peak, successfully tested with the September trough, at the 2,863 level, which coincides with the bottom of its rising channel since April.

The technology selloff, fueled by losses in software companies and semiconductor manufacturers, pushed the NASDAQ 100 to its lowest level since August 1. Since these stocks are leaders during rallies, momentum traders sell them first. Technically, the price fell below its uptrend line since April, increasing the potential for a further fall to 7,500 and the uptrend line since February.

Russell 2000 Daily Chart
Russell 2000 Daily Chart

The Russell 2000 dropped 0.16 percent, in a mirror image of the Dow's 0.15 percent climb. This seems to indicate that traders were not concerned with the heightened US-China trade tensions. Technically, the small-cap benchmark is on the verge of a reversal, having registered a lower trough after falling below its uptrend line since February. For now, the index found support by the January and March peaks, which coincided with the longer-term uptrend line since the February 2016 bottom. A rally that would fail to overcome the late-August peak, followed by a fall below the 1,600 level, would establish a reversal.

Meanwhile, the International Monetary Fund cut its outlook for global growth for the first time since 2016—when stocks bottomed—citing the impact of the US-China trade dispute. China's slowing growth complicates the picture, not only because of the country's global weigh as the world's second-largest economy, but also because it can prompt policymakers to step up currency devaluation, which would in turn deteriorate trade relations.

Amid persistent Treasury selling, which is likely to boost the dollar and scare equity investors into further selloffs, traders will now focus on the $230 billion US Treasury auction taking place this week.

In other news, Italy’s 10-year bond yield slipped after spiking on Monday.

WTI Daily Chart
WTI Daily Chart

WTI oil climbed toward $75 a barrel. Technically, the advance follows yesterday’s hammer, increasing the odds for traders to push prices up past last week’s near $77 peak.

Iron ore futures in Dalian jumped to the highest level in almost three weeks on higher demand.

Up Ahead

  • Canadian Housing Starts for September are released Tuesday.

  • Bank of Canada Governor Council Member Carolyn Wilkins speaks on Tuesday.

  • The US Treasury auctions $230 billion worth of debt this week.

  • US President Donald Trump holds the latest series of rallies this week ahead of the November 6 mid-term elections.

  • Canadian Building Permits for August are released on Wednesday.

  • Canadian New Housing Price Index for August is released Thursday.

  • US consumer prices, due on Thursday, are expected to have remained elevated in September, climbing 2.3 percent from a year earlier.

  • JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) kick off earnings season for US banks on Friday.

Market Moves


  • Canads's S&P/TSX Composite was closed Monday.
  • Futures on the S&P 500 dropped 0.1 to the lowest level in more than four weeks.

  • The UK’s FTSE 100 lost 0.24 percent as of 11.06am GMT.

  • Germany’s DAX gave up 0.41 percent as of 11.06am GMT.

  • The MSCI Asia Pacific Index retreated 0.8 percent, hitting the lowest level in 15 months with its seventh consecutive decline.

  • The MSCI Emerging Market Index fell less than 0.05 percent to the lowest level in almost 17 months.


  • The Canadian loonie was down 0.23 percent against the U.S. greenback early Tuesday, trading at 0.7698.

  • The Dollar Index gained 0.17 percent.

  • The euro dropped 0.1 percent to $1.1485.

  • The British pound slid less than 0.05 percent to $1.3088.

  • The Japanese yen eased 0.1 percent to 113.35 per dollar.


  • Canada’s 10-year yield was down early Tuesday at 2.595 a 0.23-percent decrease.

  • The yield on 10-year Treasuries edged two basis points higher to 3.25 percent, hitting the highest level in more than seven years with its fifth straight advance.

  • Germany’s 10-year yield climbed three basis points to 0.56 percent.

  • Britain’s 10-year yield gained four basis points to 1.714 percent.

  • The spread of Italy’s 10-year bonds over Germany’s slipped six basis points to 2.9813 percentage points.


  • West Texas Intermediate crude climbed 0.7 percent to $74.81 a barrel.

  • Gold advanced 0.2 percent to $1,190.85 an ounce.

Opening Bell: U.S. Treasurys, Futures Sell Off On Trade Risk; USD Pops

Related Articles

FactSet Research Systems Inc
Podcast: Financial Market Preview - Thursday 16-Sep By FactSet Research Systems Inc - Sep 16, 2021

US futures are indicating an unchanged open as of 05:00 ET. European equity markets are higher in early trade, while Asian markets were mixed overnight. There has been no change to...

Opening Bell: U.S. Treasurys, Futures Sell Off On Trade Risk; USD Pops

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email