US stock markets bounce but FX and bonds less convinced

This is a bit of a strange move in the stock market as equities catch a big bid. The S&P 500 is up 34 points after opening lower. To be fair, in the context of the rout yesterday, it’s a small bounce but it came a bit out of left field.

Some of that could be month-end flows or short-covering after a dive in Mag7 stocks. Nvidia is now up 2% after trading 2% lower in the pre-market.

I tend to think it’s something idiosyncratic rather than a larger change in part because bonds and FX have stayed largely stable through the move. US 2-year yields are almost exactly where they were when the market opened and the whole curve is 2-4 bps lower today.

In FX, the loonie is making something of a comeback but in general the dollar is strengthening at the momement, which is the opposite of what you would expect in a ‘risk on’ rally. Cable tried the upside but has been pulled right back into the daily range.

On asset that is playing along is bitcoin, which has bounced nicely to $84K after falling below $80K briefly in Asia.

This article was written by Adam Button at www.forexlive.com.