The Fed’s decision not to taper has global markets on fire overnight, following the afternoon move in the U.S.
- Asian Indices All Green, Led by Southeast Asia – Indonesia, Thailand, and India all saw their equity indices rally more than 3% on the day. India and Indonesia had been most affected by the rise in rates this summer as their currencies fell rapidly. The Fed’s decision had traders rushing back in to these countries. Japan and Hong Kong were both up between 1.5 and 2%.
- Europe Indices All Green, Led by Turkey – Once again, a similar theme. The country hardest hit by the emerging market selloff is seeing the largest snapback rally. The Turkish equity index is up almost 7% (and 20% in just 2 weeks), and the Turkish lira gained 2.5% after yesterday’s news. The Euro Stoxx 50 index is rapidly approaching the 3,000 level. Since 2008, it has only briefly traded above that level a few times in 2011.
- Commodities All Higher – Most of the move occurred in the 2 hours after the Fed announcement, so the overnight price action has only been slightly green. But it’s notable that all commodities, from grains, to metals, to energy are higher overnight. Precious metals were the leader yesterday, as gold rallied more than 4% and silver almost 7%.
- Bond Yields Catch Down – Bond yields opened much lower around the world. The emerging markets once again saw the biggest decline in yields. U.S. bond yields have actually moved a bit higher overnight, with the 10 year yield around 2.705.
- EUR/JPY Breaks Out Above 133.80 – This important risk appetite barometer broke above the May 22nd high of 133.80, coinciding with SPX futures making a new overnight high. The EUR/USD also continued higher overnight, nearing the high of 2013, which is at 1.3711