Global equity markets traded lower once again today as markets struggled with the prospect of an independent Scotland as well as speculation of a sooner than expected rate rise in the US. Benchmark indices across Europe spent much of the session under pressure, with the CAC and DAX both briefly attempting to push above opening levels earlier on before swinging back into negative territory.
In what was a largely absent session day in terms of economic data investors were left contemplating the previous session’s revelations and were prompted to take a closer look at recent economic data releases which have been on the whole relatively positive. The sanguine outlook for the US economy saw 10 year government yields rally higher for the third straight session, past 2.53% for the first time since early August. Long term bond yields in the eurozone also rallied higher, with German 10 year yields rising back above 1%, its highest level in a month, as investors analysed yesterday’s study by the San Francisco Fed, startling otherwise complacent investors into realising the pace of tightening monetary policy may be considerably faster than most had anticipated.
The prospect of an impending US rate rise pushed the dollar to a fresh high against the yen as the greenback gained ground for a third straight session. The dollar rose to a six year high against the yen, trading towards 106.84 before pulling back slightly to 106.64 towards the end of the European session. The currency could gain further upside in the coming sessions ahead of this month’s FOMC meeting and subsequent rate decision, due to take place next week.