ForexLive Americas FX news wrap: Bond meltdown hits everything


Forex news for New York trade on February 25, 2021:

Markets:

  • CHF leads, AUD lags
  • S&P 500 down 96 points to 3829
  • US 10-year yields up 15 bps to 1.52%
  • US 5-year yields up 22 bps to 0.81%
  • Gold down $35 to $1769
  • WTI crude up 26-cents to $63.49

The bond market is putting pressure on just about everything else. Yields ticked higher Thursday and that weighed heavily on stocks once again but things really began to move after a huge tail in the 7-year auction. That led to a puke out of bonds that spilled over to stocks and FX.

The dollar was heavily bid in the second half of the day leading to sharp reversals in commodity currencies from multi-year highs. CAD hit a three-year high after strong US durable goods data but completely reversed afterwards even with Canadian yields rising in step (if not more) than their US counterparts.

The market will be on high alert for some kind of soothing words from the Fed in the day ahead but there’s also a fair argument that month-end rebalancing could push down yields and that convexity hedging exaggerated today’s move and may have led to a blow-off top.

The euro and sterling held out through London trade but busted afterwards, falling to 1.2177 and 1.4000, respectively. Sterling had earlier risen as the UK rates market priced out BOE cuts.

Forex news for New York trade on February 25, 2021:



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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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