Yesterday’s U.S. equity selloff (Dow Jones -1.51%, S&P 500 -2.12%, Nasdaq -3.26%) spilled over into the APAC and European sessions to become a global equity rout. Traders are on edge today with some shifting to a risk-off stance, driving up treasury prices (and pressuring yields). The VIX Index, which measures S&P 500 Index 30-day options volatility (also known as Wall Street’s fear gauge), spiked to 21.99 after closing at 15.55 last Friday.
The dollar index is -0.50% today, reversing yesterday’s 0.17% gain. The dollar is lower vs. all G10 currencies, led by a 0.90% drop against the Japanese yen, and followed by declines of 0.63% vs. NOK, 0.54% vs. AUD, 0.47% vs. NZD, 0.39% vs. EUR, 0.37% vs. GBP, 0.31% vs. CAD, and 0.28% vs. CHF.
Today the Bank of Canada cut its overnight rate to 4.25%, an expected 25 basis-point cut from the previous 4.50%. The Canadian dollar strengthened vs. the USD immediately following the cut and is holding onto gains.
Today’s JOLTS Job Openings (job openings by industry) was reported 7.673M, lower than the expected 8.100M. U.S. Treasury yields are lower following the data with the yield curve steepening just enough to raise the 10-year yield (3.791%) above the 2-year yield (3.787%).
Market sensitivity to jobs-related data is becoming more evident. The outsized impact of today’s JOLTS data hints at what can be expected with Friday’s August Nonfarm Payrolls, the leading gauge on the U.S. jobs market. Payrolls are forecast to increase by 165k, with some speculating that a downside miss will increase odds of a 50 basis point hike at the FOMC’s September 18th meeting, 2 weeks from today.
