Early Risk On Tone Turns More Cautious

The positive risk tone from earlier has given way to a more cautious tone as the session has progressed. This is evident in the equity space, with US futures (Eminis) giving up around half of their gains, last around +0.4%, while EU futures have lost around ~1% from session highs. Regional equities are mostly lower (ex China).

• This is supporting the USD; BBDXY is back to 1246, up from earlier lows near 1244. USD/JPY is the exception, which is back to 132.10/15 (versus earlier highs of 132.65).
• US yields are comfortably off earlier highs, 2yr last near 3.95% (earlier high if 4.02%), while the 10yr is back to 3.46%, versus 3.513% earlier in the session. Yields remain above closing levels from NY last Friday.
• One of the focus points in early Europe is likely to be the impact on holders of Credit Suisse bonds, which have been wiped out ($17bn worth of AT1 bonds).
• In US markets the focus is likely to remain on mid-sized banks, which have seen a flight of deposits to larger institutions, and prompted calls for the FDIC to insure all deposits at such banks for the next two years.