Free Trial

Recession Risk Looms Large Driving Hunt For Safety


Participants flew to safety as recession fears resurfaced in the absence of any notable reassuring headlines. E-mini futures went offered, signalling that Thursday's Wall Street rout may not be over, with a long weekend in the U.S. drawing nearer.

  • Data released out of the U.S. on Thursday fanned speculation re: inbound recession as core PCE & personal spending both printed slightly below expectations, with further data signals inbound today.
  • Safe haven currencies firmed and the yen paced gains in Tokyo trade. Spot USD/JPY retreated in tandem with its 1-month risk reversal as Japan/U.S. 10-Year yield gap continued to shrink. Lower U.S. Tsy yields helped the yen become the only G10 currency to outperform the greenback.
  • High-betas took a beating, with the Antipodeans leading losses. NZD/USD sank through a congestion of recent troughs near the $0.6200 mark on its way to worst levels in two years. AUD/USD also lodged two-year lows after breaching support from the low print of May 12.
  • Weakness in Antipodean FX space may have been exacerbated by weak New Zealand consumer confidence figures, which came on the heels of a survey showing that local business conditions deteriorated last month.
  • Offshore yuan plunged on broader aversion to risk, even as Caixin M'fing PMI came in better than expected, while the PBOC set the mid-point of permitted USD/CNY trading band nearly 30 pips below sell-side estimate.
  • There was speculation that reports of another delay to the publication of China Great Wall's 2021 annual report helped weaken the redback. A similar postponement by rival Huarong last year sent Asian credit markets into a tailspin.
  • Financial markets in Hong Kong were closed in observance of a public holiday, sapping regional liquidity.
  • Manufacturing PMI readings from across the globe will keep trickling through today. Central bank speaker slate features ECB's de Cos & Panetta.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.