Financial markets are once again immersed in a phase of risk aversion, a sentiment spurred by the notable ascent of benchmark treasury yields. US 10-year yield is confidently moving closer to the 5% mark. Even Japan's 10-year JGB yield is hitting another decade high. The prevalent mood has propelled safe-haven currencies like Swiss Franc, Yen, and Dollar to be the standout performers of the day. In contrast, Aussie, Kiwi, and Loonie trail behind. Euro and Sterling find themselves in an intermediate position, though the former shows slight dominance. All eyes are now turned to Fed Chair Jerome Powell's upcoming policy address to the Economic Club of New York. Anticipation is rife, with markets eager to glean insights into the potential for a further rate hike in the closing months of the year. However, expectations are tempered, with Powell likely to opt for a balanced approach, letting other FOMC members lead the discussion. Nonetheless, he is expected to reiterate the "higher for longer" narrative and underscoring the importance of data in shaping future policy decisions. The bond and stock markets' reaction to his address could play a pivotal role in steering Dollar's course. In another significant development, Chinese property giant Country Garden is under scrutiny. Bondholders have reportedly sought urgent discussions following the company's failure to make a USD 15m coupon payment. This misstep puts the developer on the brink of default, thereby exacerbating the risk-averse mood permeating Asian markets. From a technical perspective, 10-year yield resumed recent up trend by breaking through 4.887 resistance. Further rise is now expected to 61.8% projection of 1.343 to 4.333 from 3.253 at 5.100. Reaction from there would be crucial in driving overall risk sentiment. Sustained break of this 5.100 projection could spark steep selloff in stocks with contagion effects to push up Dollar. In any case, near term outlook in TNX will stay bullish as long as 4.532 support holds, in case of retreat. In Asia, at the time of writing, Nikkei is down -1.68%. Hong Kong HSI is down -1.95%. China Shanghai SSE is down -1.21%. Singapore Strait Times is down -1.14%. 10-year JGB yield is up 0.033 at 0.841. Overnight, DOW dropped -0.98%. S&P 500 dropped -1.34%. NASDAQ dropped -1.62%. 10-year yield rose 0.057 to 4.904. |