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Risk sentiment breathes easier for the time being

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The market breathes in an air of calm so far in European trading

After the sharp declines yesterday and the deterioration of the risk mood, things are looking calmer today with European indices up by around 0.8% to 1.0% while US futures are also gaining modest ground; S&P 500 futures up 0.5%.

Elsewhere, Treasury yields are also up a little over 2 bps to just above 1.20%:

USGG10YR

That said, this is pretty much all there is right now. That being the market is just sensing a bit of calm and relief after yesterday’s sharp selloff in risk trades.

The coast isn’t clear yet and sentiment is still relatively fragile. In FX, things are shaky with commodity currencies looking rather vulnerable, though coming off earlier lows.

The bond market remains key but the series of lower highs, lower lows in Treasury yields still makes for an argument that any major turnaround at this point is tentative at best.

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