The US equity markets struggled yesterday given the uncertainty over trade talks between the US and China and this morning a number of the Asian equity markets have followed the negative sentiment from the US, although losses has been modest. 10Y US Treasury yields fell a few basis points yesterday. Hence, the flight to safe assets is still there. The BoJ kept its monetary policy unchanged and cut its inflation outlook. Hence, the demand for foreign assets from Japanese investors is expected to remain strong and hedging USD exposure for Japanese investors will remain expensive.
Yesterday, Spain sold EUR10bn in a new 10Y benchmark. The order book was more than EUR46bn, which is a new record for Spain. The peripheral government bond market performed well yesterday on the back of the strong demand. Today is a relatively quiet day ahead of the important day tomorrow, with the Norges Bank meeting, ECB meeting and preliminary PMIs. In the euro area, the consumer confidence indicator for January is due out at 16:00 CET. European equity markets are poised to open slightly in the red on Wednesday, extending what has so far been a loss-making start to the week as Asia offers little direction for traders.