Questions of the day: should I be trading AUD and treasuries? The AUD had a good move and, arguably, a breakout yesterday against various currencies. The breakout is arguable because it is from a level from which the market has previously broken out before reversing — so it is not a new low, but it is a breakout. Treasury yields fell below 3% yesterday.

I have not traded these, and so far today that looks like the right decision. The market has fallen on a negative revision to a Chinese leading indicator that is very new (launched in May), and on concerns about Eurozone bank funding (banks have to repay EUR 442bn, borrowed a year ago, to the ECB tomorrow) that are unlikely to be borne out in reality. So I was sceptical of the recent fall — it has been driven more by short-term jitters than the kinds of things that drive a trend. Also, I had been expecting a rally in risk assets. The risk to that view was a story that emphasised a slowing rate of growth. That story may be coming closer with poor consumer and job numbers, but the picture is still mixed and should not be enough to kick off a sustained decline in risk assets. I could be wrong about that — but there are enough things that will break out soon if the story takes hold, not least the equity market, for me to hold off a risk-off trade today.

Incidentally, it seems I was right to be cautious about trading corn ahead of today’s crop report — see chart below.