By Jamie McGeever
ORLANDO, Florida (Reuters) – TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
U.S. assets in the red
It was a sobering day for U.S. assets on Tuesday, with Wall Street, the dollar and longer-dated Treasuries all declining as investors took a breather to digest last week’s U.S. sovereign credit downgrade and the latest twists in President Donald Trump’s efforts to push his sweeping tax-cut bill through Congress.
The general fiscal health of developed economies and rise in long-term yields more broadly are top of investors’ minds, and the most significant move in global markets on Tuesday was Japan’s 30-year yield hitting a record high. More on that below, but first, a roundup of the main market moves.
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If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. A junk-rated U.S. Treasury? Markets ‘care’ about that:Mike Dolan 2. Trump visits Capitol to try to mend U.S. HouseRepublican rifts on tax bill 3. BOJ urged to boost bond buying in wake of spike insuper-long yields 4. China cuts key rates to aid economy as trade war simmers 5. With U.S. and EU deals, Britain embarks on high-riskbalancing act
Today’s Key Market Moves
* Wall Street’s three main indices close lower, falling asmuch as 0.4%. The S&P 500’s fall is its first in seven sessions.Curiously, however, the VIX volatility index also falls. * Japan’s 30-year yield leaps 16 bps on the day to a recordhigh of 3.14%. * The Australian dollar falls 0.6%, one of the biggestdecliners in G10 FX, after the RBA cuts interest rates andleaves the door open to further easing. * Mainland Chinese and Hong Kong-listed stocks rise afterChina’s central bank cuts rates for the first time sinceOctober. * Safe-haven gold rises nearly 2% on the back of a weakerdollar, global trade uncertainty, and Wall Street weakness.
Japan’s long bond warning
If Tuesday was a relatively calm day across global equity markets, the same cannot be said for Japanese Government Bonds, particularly the long end of the curve after a poor auction of 20-year securities triggered a rush for the exits.
