U.S. equity markets are poised to open a little higher on Thursday after making marginal gains a day earlier in light trade. It’s likely to be another relatively quiet day, as is often the case during the holiday period, and a lack of economic events on the calendar won’t help matters. There is a few pieces of data scheduled for release, although its mostly low and medium tier data, including jobless claims, Chicago PMI and trade balance figures. We’ll also get crude inventories data, as oil continues to trade near its highs with WTI Crude oil pushing $60 per barrel.
USD under pressure again on lower U.S. yields
The U.S. dollar is trading lower for a second day on Thursday, still struggling after yields on Treasuries slipped on Wednesday. The flattening of the yield curve has triggered concerns that investors are possibly pricing in a slowing of the economy or even a recession and while this has historically happened on such expectations, I’m not convinced this is the case this time.
Given the current environment, it’s possible that this is more a reflection of longer term interest rates and the low inflation environment than the economic prospects. Still, if yields on long term U.S. debt don’t rise or even fall as the Federal Reserve raises interest rates, it could fuel fears of an impending recession.
Bitcoin tumbles as tough holiday period continues
Bitcoin is coming under selling pressure once again, with efforts by South Korean authorities to rein in speculation being blamed for the drop of around 10%. While this is likely a contributing factor, I wonder if given the pre-holiday drop, whether speculators have become more sensitive to negative news.
We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldn’t surprise me if we see prices heading back below $10,000 before they find their feet again.