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Oil prices jumped to their highest since June in Asia trading on Monday following US and Israeli strikes on Iran, while the US Dollar Index (DXY) made an outsized gain, as markets opened for the first time since US and Israeli airstrikes killed Ayatollah Ali Khamenei, and as Iran’s retaliatory measures hit targets across the region including Dubai and Cyprus.
Brent crude initially jumped of as much as 13% early morning Hong Kong time before that gain was pared to about 6% by midday, putting the price of crude at about $76 a barrel. US Treasuries followed a similar path, with 10-year yields falling by high-single digits early on before retracing to a drop of less than 5bps by early afternoon.
And several CDS spreads pointed to multi-month highs. In Asia, the iTraxx Asia Ex-Japan was 4.5bps wider to 72.25bps, its widest since mid-October. The iTraxx Australia gauge was +4.5bps to 72.75bps while the iTraxx Japan index was +3bps to 60.5bps.
This appears more as a macro-led reaction, as single name constituents within the indices lagged the moves.
In the Middle...
