Fed minutes were the talking point early on and the split decision the market hadn’t really expected. A little more uncertainty thrown into the mix which creates hesitation and a reason to take a little cash off of the table. Throw in the Trump disbanding both the Manufacturing Council and Policy Forum and questions start to be asked of whether all this could derail the planned reforms. The USD looks, even in Asian time zone, to have found strength but with the safe-haven JPY again taking it back into the 109’s. The Nikkei drifted a touch but late US futures have followed global markets lower. Shanghai and KOPSI better (+0.6%) as headlines remained low-key but have also suffered in late US trading.

It took its time in Europe for equity market to roll-over but then we started to watch prices decline in the US on various pieces of news and that was all it took. The Trump disbanding the Manufacturing Council and Policy Forum was probably the confidence trigger (if you needed to wait for that) but I guess – that’s silly season for you! The ECB Minutes declared a concern over the strengthening Euro (back then) and so we saw a correction in FX that probably helped push
a few dealers to react. European stocks closed on their lows for the day, then passing the batten over the US markets. Core Europe closed around -0.7% across the board but have watched futures decline even more towards the close of the US day.

US markets were weak from the opening so we knew we were in for a day where dealers would be looking for bids. As the session progressed, nerves grew and sentiment turned; with markets at over-stretched levels it was little surprise we end the day at the lows. Rumours were used as an excuse early in the day that Gary Cohn has resigned, but this was soon denied but didn’t really help the market mood. VIX has started a great run (up 28% today) with the last trade seen just north of 16! Gold did see support early session but has drifted towards the close (last seen +$10 at $1290. Dow is closing down around 270 points (-1.2%) with the S+P off around -1.5% and the Nasdaq -2%. Market has seen steady selling all day and looks like silly season has begun. After the close we hear that the plan to have an infrastructure advisory panel has been shelved.

2’s closed 1.30% (-3bp), 10’s 2.19% (-4bp), 30’s 2.78% (-3bp), Bunds closed 0.42% (-2bp) which closes the US/Germany spread +177bp (-2bp). France 0.72% (-2bp), Italy 2.02% (-1bp), Greece 5.51% (+4bp), Turkey 10.48% (-6bp), Portugal 2.72% (-5bp) and Gilts 1.09% (-1bp).