OVERNIGHT NEWS
# Global markets whipsaw on poor liquidity, growth/inflation uncertainty. Swiss franc big winner in FX this week on haven appeal and SNB rate increase. 10y Bund 30bp intra-day range yesterday was largest in 30 years. Fed chair Powell speaks at Dollar conference at 14:45 CET.
# BoJ keeps all policy settings on hold, to continue YCC easing until inflation goal achieved, not thinking about raising 10y JGB yield ceiling, will continue to monitor FX closely, necessary to pay due attention to developments in financial and FX markets and their impact on economic activity and prices. 10y yield falls from 0.27% high to 0.23%, USD/JPY +1.8% at 134.30.
# ECB president Lagarde to EZ FinMins: fragmentation risk is serious threat to price stability mandate, new anti-crisis tool would kick in if peripheral bond spreads widen beyond certain thresholds or if market movements exceed certain speed (FT).
# Nikkei -1.7%, EUR 10y IRS -2bp at 2.49%, Brent crude -0.3% at $119.5/b, Gold -0.4% at $1,844/oz.
A wild 24 hours in Europe’s bond market
Latin America:
Latam currencies gave back their post-FOMC gains and ended the session weaker, pressured by subdued risk appetite. CLP was the region’s main underperformer, closing 1.1% weaker, while MXN closed ~0.9% lower. MXN traded almost 2% weaker earlier in the session, pressured by US recession concerns, but found an important resistance level at the 20.70 and eventually retraced some of its losses, closing at 20.43. The price action in rates was relatively favorable, with some rallies across the board, but mostly concentrated across the CLPxCAM curve. 1y CLPxCAM closed 22bp lower, at 9.75%. Brazil local markets were closed in observance of a local holiday, but we expect local assets to catch up with the broader Latam price action at market open on Friday.