Collinson FX Commentary: Feb 13 - Bond vigilantes saddle up

by Collinson FX 14 Feb 2018 02:34 NZDT 14 February 2018

Bay of Islands Sailing Week, January 2018 © Richard Gladwell

Collinson FX Commentary: Feb 13 - Bond vigilantes saddle up

The Dow surged over 400 points, to open the new weeks trade, despite a further spike in US bond yields. The strong US economic growth was the trigger for a spike in interest rates that caused the tumultuous sell-off over the last week, or so.

A new term to describe interest rates has been floated, 'the bond vigilantes have saddled up', which is brilliantly descriptive.

The recent surge in yields is due mainly to the strength of growth in the economy, although the massive expansion of global debt has lead to extensive supply, allowing rates to rise. The difference in today's trade, is that rates went up and so did equities.

The Dollar remains strong, with the EUR trading 1.2280, while the Yen holds 108.60. The relative strength of the reserve continues to oppress commodity currencies, with the NZD trading below 0.7250, while the AUD holds around 0,7840. A slow day for economic data releases, globally, will build with keen interest in inflation/growth numbers.

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