LIVE MARKETS-Strong USD buying into month end?

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STRONG USD BUYING INTO MONTH END?

Barclays proprietary FX rebalancing model is indicating strong dollar buying against all major currencies by month-end.

The model provides an indication of month-end rebalancing FX demand from portfolio managers who want to maintain currency hedges, based on month-to-date equity and bond performance.

Trump's Liberation Day tariff announcement has sent global equities into a tailspin, with U.S. stocks underperforming.

The S&P 500 .SPX and Nasdaq .IXIC are both down about 5% since April 2, while the STOXX 600 .STOXX, DAX .GDAXI and FTSE .FTSE are down between 2.3%-4%. Japan's Nikkei 225 .N225 is down just 1.9%.

U.S. bond markets were also rattled by Trump's tariff plans.

The 10-year bond yield US10YT=RR is up 15 basis points since April 2. Bond yields move inversely to prices.

In contrast, demand for German debt has been strong, with the 10-year bund yield DE10YT=RR down 25 bps in the same timeframe.

"The clear outflows from all major US assets at a pace of c.3-4 standard deviations, dominated by US equities given their large market caps, mean our model has produced a strong dollar buying signal in April," Barclays FX analyst Sheryl Dong says.

"The resulting price actions in the dollar may be dampened, however, should market players adjust their hedge ratios or portfolio allocation in dollar assets following the confidence shock."

The dollar index =USD, which measures the currency against six major peers, is down about 5% since April 2.

(Samuel Indyk)

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