Despite the low volume we saw a positive rally across Asian equities with all markets closing around 0.5% higher. The PBOC set the Yuan rate at 6.486 the lowest since mid 2011 but marginally weaker than yesterday.
In Europe markets moved ahead with the DAX, FTSE and CAC all closing higher by around 2%, the exception being FTSE up only 0.9% as Miners (Anglo American and Rio Tinto) lost 6%. Talk in Germany was that Deutsche Bank has sold its 20% holdings in Hua Xia (a Chinese Bank).
In the United States. there was a strong Tech sector and firmer Commodity prices which helped US equities higher with a triple digit close up over 1% for all three (DOW, NASDAQ and S+P).
Oil bounced after yesterdays sell-off. WTI and Brent both up almost 3% but with WTI still trading a premium to Brent. Nat Gas rallied strongly (today +6.2%) on forecasts of colder weather ahead.
Alas, the US Treasury saw a poor turnout for today’s auction of $35bn 5yr Notes. Average price given was 1.785% with a bid-t-cover ratio of 2.32 (versus a recent norm of 2.49). The curve steepened with 10’s and 30’s both losing 8bp’s whilst 2’s and 5’s gave-up 4 and 7bp respectively. The European Bond Market traded heavy also but the spread did widen more between the two. German 5yr closed -0.02% and 10’s at 0.64% meaning the spreads US/Germany 5yr are +181bp and 10’s are +167bp