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(CEP News) - The Dow Jones Industrial Average opened down more than 600 points to below 8000 for the first time since April 2003. In minutes, however, the index turned around and briefly rose into positive territory.
Volatility has risen to unfathomable levels. The VIX, which measures volatility in the S&P 500, hit a record 70.9. Until this month, the measure had never risen above 50 and only closed above 40 a handful of times. Scores of veteran traders have said they've never seen anything that approaches the panic and fear that's gripped markets. The Japanese Nikkei didn't participate in the rebound and closed down 9.6% for a cumulative 23.5% decline on the week. The S&P 500 was down 17% on the week and the TSX has posted a relatively modest 6.3% decline, partly because of a rally in gold prices. Toronto's S&P/TSX composite index is down 151 points to 9449, the Dow Jones industrial average is down 129 points to 8450, the S&P 500 is down 16 points to 894 and the Nasdaq is down 12 points to 1633. European stock markets are lower, with the Eurostoxx down 152 points to 2140, the UK FTSE 100 down 267 points to 4047 and the German DAX down 317 points to 4570. Asian markets were lower, with the Japanese Nikkei closing down 881 points to 8276 and the Hang Seng Index closing down 1146 points to 14797. Foreign exchange markets are equally volatile. The unwind of the carry trade has crushed the New Zealand and Australian dollars against the yen. The gap between the high and low this week in NZD/JPY has been 25%, surpassing the previous all-time high of 13%. In just over two months, the Australian dollar has fallen from 98 cents to 67 cents against the USD. The Canadian dollar is down nearly 2 cents against the USD on Friday despite a far-better-than-expected employment report. Strategists at RBC Capital Markets say the decline will continue. "The Canadian dollar remains a currency linked to the global economic cycle. With the IMF now seeing a global recession as the base case scenario, a key fundamental backdrop for Canada's terms of trade and CAD is fast deteriorating," the strategists wrote in a client note. The Canadian dollar is down 0.0.203 to 0.8493 against the U.S. dollar (1.1776 USD/CAD) and down 1.72 to 85.07 against the yen. The U.S. dollar is up 0.31 to 100.12 against the yen and the Dollar Index is up 0.453 to 81.616. The euro is down 0.0053 to 1.3553 against the U.S. dollar, up 0.0304 to 1.5950 against the Canadian dollar, down 0.0040 to 0.7917 against the pound sterling and is lower by 0.10 to 135.70 against the yen. The pound sterling is up 0.0022 to 1.7119 against the U.S. dollar and up 0.0491 to 2.0156 against the Canadian dollar. WTI crude oil is down $4.79 to $81.80. The front month gold contract at the Chicago Board of Trade is up $12.00 to $898.50 per ounce. U.S. two-year yields are up 10.2 bps to 1.63%, with five-year yields up 14.3 bps to 2.82%, 10-year yields up 8.6 bps to 3.87% and 30-year yields up 3.5 bps to 4.14%. The Eurodollar March 09 contract is up 11.5 ticks to 97.67. The yield curve is flatter, with the 10/2-year spread down 0.9 bps to 223.65 bps. Yields on two-year Canadian government bonds are up 12.8 bps to 2.26%, with five-year yields up 16.9 bps to 2.96%, 10-year yields up 21.5 bps to 3.85% and 30-year yields up 8.8 bps to 4.25%. The December 08 BAX contract is down 6.0 ticks to 97.47. In Germany, returns on two-year German bonds are flat at 3.08%, with five-year yields up 9.3 bps to 3.60%, 10-year yields up 12.6 bps to 4.00% and 30-year yields up 20.8 bps to 4.42%. Yields on UK two-year bonds are down 6.3 bps to 3.55%, with five-year yields up 3.6 bps to 4.16%, 10-year yields up 11.9 bps to 4.49% and 30-year yields up 14.7 bps to 4.52%. All data taken at 10:28 a.m. EDT. By Adam Button,
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, edited by Sarah Sussman,
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