6 May 2015
Position squaring continues to sweep across markets – Scotiabank
FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes that the higher shift in bond yields, rising commodity prices and inflation expectations has led to a massive position squaring across markets.
Key Quotes
“With a hint of inflation in markets (commodity prices are higher, inflation expectations are rising and inflation metrics have stabilized), bond yields have shifted dramatically higher. Since the low in the German 10-year yield on April 17th, its yield has rallied 45bpts to 0.53%; while UK yields are up 37, Australian yields up 57 and US yields up (a comparatively small) 32bpts.”
“Currencies led the initial shift with most having reached their lows in mid-March; however since April 17th, SEK and EUR have rallied 4%, Australia is up 3% while CAD and GBP are up 2%; while the USD DXY has dropped 3%. This is an important sentiment change that has included massive position squaring across markets.”
Key Quotes
“With a hint of inflation in markets (commodity prices are higher, inflation expectations are rising and inflation metrics have stabilized), bond yields have shifted dramatically higher. Since the low in the German 10-year yield on April 17th, its yield has rallied 45bpts to 0.53%; while UK yields are up 37, Australian yields up 57 and US yields up (a comparatively small) 32bpts.”
“Currencies led the initial shift with most having reached their lows in mid-March; however since April 17th, SEK and EUR have rallied 4%, Australia is up 3% while CAD and GBP are up 2%; while the USD DXY has dropped 3%. This is an important sentiment change that has included massive position squaring across markets.”