Risk rally running out of steam? Watching US equities - ANZ

Analysts at ANZ explained that the risk rally appears to be sputtering out with US equities turning slightly negative, oil and US Treasury bond yields lower, and USD/JPY retreating from 105. US equities opened slightly higher and ground sideways for most of the New York session.

Key Quotes:

"European bourses failed to add to recent gains with Euro Stoxx -0.3%; FTSE 100 -0.2%; and DAX -0.3%.

US Stocks are broadly flat, with the Dow up a touch and the S&P 500 down a touch at 6.30am NZT. EIA inventories had a major impact on oil prices again with an initial pop on the headline crude -2.5m (mkt: -2.25m) drawdown, however this was quickly followed by a reversal on the news that gasoline inventories (+1.2m vs mkt: -1.0m) and distillate inventories (+4.1m vs. mkt: -0.1m) rose substantially. Oil is down 4.4%.

US treasury yields bull flattened, with the front end down 3-4bps and the long end down about 5bps. Germany auctioned 10 year paper with negative yield for the first time, but note that the new benchmark 10 year bund (August 2026) sits around 10bps above the old one (the February 2026).

Nonetheless, German 10 year yields were 6bps lower; UK 10 year yields fell 8bps. USD was mixed. USD/CAD fell to a one week low as BOC held rates, while AUD and NZD are little changed. Gold is up and credit spreads are marginally wider today.