The Nikkei could not hold the late US rally and as the cash market opened the weakness returned from the opening, especially having just seen the weaker than expected Machinery Orders. Gaping lower, we did see a small bounce but not enough energy to look for a positive close. Eventually the index closed around 1% lower as we saw the JPY trade down to 106.25. Asian markets were quiet due to national holidays in Taiwan, Hong Kong and China. Late in the US session that selling has continued with the Nikkei down a further 0.5% whilst China 300 and Hang Seng futures decline only 0.2%.
In Europe, we heard from Mr Draghi speaking in Brussels who set the tone for the day. Stating that monetary policy alone is not enough he called again on central banks to play their part! Any further delays in Structural reforms could have a lasting consequences on the Eurozone overall. All core European markets traded heavy, ending with falls of around 1% across the board. There was a storey milling around the street that both Deutsche Bank and Credit Suisse may need to raise additional cash. Shares were lower for both down 1.3% for DB and 2.3% for CS so not really too much to worry about but worth keeping an eye on the shares.
The US markets opened lower then spent the rest of the day recovering to close almost unchanged. The market remain focused on the BREXIT concerns and the closer we get to the June 23rd vote the more volatile these moves will become. Interesting that the VIX closed this evening at 14.4, marginally better than previous close but in a rising prices environment. Gold had another good day but remains with the broad range, last seen this evening at $1272.
US Treasuries took the additional 30yr well this evening and closed with daily gains. The 2/10 curve narrowed yet again closing at 91.5bp. German 10yr Bund traded down to 0.03% today closing the spread at +165bp. Italy 10yr closed 1.38% (-1bp), Greece 7.26% (+4bp), Turkey 9.37% (+8bp), Portugal 3.04% (u/c) and Gilt 10yr at 1.24% (-1bp).