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.