Treasury And Dollar Selling Go Hand-In-Hand

Overview: Selling pressure on the dollar and US Treasuries intensified in North America yesterday. The dollar fell to new lows against the dollar-bloc, euro, and Swiss franc yesterday. The US 10-year yield rose to new three-week highs. The S&P 500 set a new closing record high. While Asia Pacific equities are mostly advanced, mild profit-taking is seen in Europe, and the Dow Jones Stoxx 600 is lower for the second consecutive session.US shares are also trading a little lower. Australia's 10-year yield rose above 1% for the first time in more than three months, while European yields are benchmark yields are a little softer. The US 10-year yield is flat near 0.94%. The dollars mixed. Sterling has joined the yen and Swiss franc in a move higher, while the other majors are mostly little changed. Emerging market currencies are also mixed. Of note, the dollar fell below KRW1100 for the first time in two years, and despite higher than expected inflation, the Turkish lira has come back bid. The JP Morgan Emerging Market Currency Index is little changed. Gold continues to recover. It is higher for the third consecutive session, the longest advance in nearly a month. January WTI is a little heavier after rebounding smartly from around $44 to almost $46.It is straddling the $45 area today.  

Asia Pacific

China's Caixin PMI was stronger than expected. The service PMI rose to 57.8 from 56.8. Economists had mostly looked for a small pullback. The composite rose to 57.5 from 55.7. 

Japan's preliminary PMI was revised higher. The service PMI rose to 47.8 from the 46.7 preliminary reports and 47.7 in October. The composite PMI stands at 48.1 rather than 47.0 as the initial estimate suggested and 48.0 in October.  

Australia's service and composite PMIs are were revised higher from the flash readings that already had shown improvement over October. The service PMI is at 55.3 from 53.7 in October, and the composite PMI is at 55.1 after 53.5. However, the more interesting news, given the tensions with China, is that its October trade surplus was larger than expected at A$7.45 bln. The September surplus was revised higher to A$5.81 bln from A$5.56 bln. Exports were stronger than expected, rising by 5% in the month, September's increase was revised to 3% from 4%. Imports had fallen by 6% in September and were expected to have grown by 4% in October but increased by 1%.  

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Read more by Marc on his site Marc to Market.

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