It's a sea of red in Asian share markets as investors flee from risk and a lot of crowded trades unwind in an unruly manner. Investors are hoping central...
It's a sea of red in Asian share markets as investors flee from risk and a lot of crowded trades unwind in an unruly manner. Popular positions from yen carry trades to crypto are being dumped in a rush to the exits, with volatility spiking and liquidity drying up.
The sprint to sell has seen trading halts triggered in several markets including the Topix and KOSPI, while the Nikkei was down a scary 7% at one stage. The index is now in bear territory having fallen 20% from its peak, which was hit less than a month ago.Investors are hoping central banks will ride to the rescue with a global version of the Fed put. Futures now imply a 73% chance the Fed will cut by 50 basis points in September, and a total 115 basis points by Christmas.
There's even chatter of an inter-meeting easing from the Fed, which seems like wishful thinking from investors in the red. The Fed's Goolsbee played down the impact of the payrolls report on Friday and has a chance to do so again later on Monday, along with San Francisco President Daly. It is notable that Treasuries have not extended Friday's huge rally, with 10-year yields back at 3.78% having hit a low of 3.723% earlier. Fed fund futures also pared early gains, particularly in the 2025 contracts.
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