Asia saw a mixed session with small plays in both directions from the core markets, the Hang Seng did however close strong (up 0.85%). Once the European session got underway most indices were trading heavy as the Euro continues to loose friends. That all changed however, once the US Markets opened for trading. After the initial weakness US Equities found renewed vigour and we saw strong buying (coupled with reasonable volume) across all sectors of the markets. Eventually the DOW closed up around 90 points (0.5%) but off the days highs.

Oil was another market that saw strong gains closing up over 3% on the day at $47.65 (TWI) and $50.20 (+2.85%) for Brent. Gold, on the other hand, did not do so well trading over $10 lower and was last seen at $1117 (-1.20%) but that should not really be a surprize when everyone is looking for positive carry trades!

There was more talk today of the Euro being the wrong side of the carry trade with players using that to buy Emerging Market currencies/assets. This is another reason why EM currencies saw good buying as we approach the big data due from ADP (in the US tomorrow), the European Retail Sales then the BoE decision Thursday followed at the end of the week by the US Non-Farms on Friday.

The long-end of the Bond Markets continue to drift as dealer watch the Equity market buying frenzy. The US curve steepened 2/10’s by 3bp and 10/30’s by 1bp with 30’s closing just under 3%. The spread TY/RX has been slowly widening in thin trade with last quote seen at +163bp. European debt traders are anxiously awaiting the European Retails Sales number which they are hoping will reflect Mario Draghi’s intentions. The whole street is aware there is only one buyer that matters and if anything happens to him it will look very ugly very quickly!