Market Update

To start with, as expected USDSEK reached its target fairly fast reacting to the demand zone that had been in place for many weeks. It was quite choppy intraday but finally broke out into late Europe, most probably ending the day with a bullish engulfing, suggesting further gains.

USDSEK. Thomson Reuters

From ZeroHedge:

While Italian and Spanish sovereign bonds weakened notably today, the equity markets across Europe decided that the limit-down move in US futures was a storm in a teacup and ignored it. EURUSD has broken its inexorable 10-day linear ramp leaving the USD almost perfectly unchanged on the week. Italy and Spain equity indices are up 2.6% and 3% respectively while Italian and Spanish bond spreads are around 16bps tighter. Rather like what we witnessed this week in the US, Europe's VIX exploded today (biggest jump since July) as protection was sought in a hurry but the underlying indices did not drop as (just like over here) they are simply too illiquid to cope with the kind of selling that is desired. This leads to the game-theoretical first-mover dilemma - and the preference was to hedge via bonds, FX, and options as Europe closed - because think of the optics if Spanish stocks were to fall?

 Today's US session, while not over has been relatively uninteresting. Thankfully the Triple-Witching will mean some moves into the close which should be good. In FX today there were some clear losers, such as the NZD down 1.2%, GBP down 0.7% but the JPY was up 0.25% against the USD.

In europe Spain was a big winner with the IBEX up over 3% closely following Spainish yields upwards.

IBEX Orange (RHS) Invs ES10y blue (LHS) . Thomson Reuters