Decline of US Credit

The US dollar went up and the US Treasury yields enjoyed a peak among a period of two weeks. The reason is the expectation that a signal will be given by the Federal Reserve of its intention to raise the interest rates of tomorrow. The US currency tracked the US Treasury yields. Stanley Fischer, the Vice Chairman of the Federal Reserve commented on the issue of raising interest rates.

In overnight treasuries, a number of events occurred. There was a dip in he T-note futures after the vice chairman of the Federal Reserve, Fischer made hawkish comments concerning the subject. The range of Futures trading were in the range of 131-2-131-29 range. It is down by 3 ½ ticks from the previous close at 131-27. Volumes were decent at 191,000 and the 10 year duration cash trades were in the 1.600 percent to the 1.585 percent range. It is to be noted that US Treasury has underperformed compared to Germany by a total 0.6 basis points in 10 year maturity when contrasted with previous London close.

Markets open with a perception of risk as caution at Jackson Hole put shadows over the market. BREXIT can be included in the list of other factors contributing to the state of the market. European leaders Merkel. Renzi and Hollande holds meetings to discuss UK’s exit from the European Union. There is also a possibility that the Netherlands may follow the UK way with its own EU referendum.

In other news, Brent Crude dips below $50 as there was a fading of expectations that producers will have to tackle the problem of oversupply. Profit taking by investors led the Shanghai Composite to lose about 0.75 percent.  When it comes to news about USD pipeline, the Industrial Bank of Korea hired Nomura and HSBC to gather meetings for the fixed income investors. These meetings took place in Singapore and Hong Kong.

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