TRADING DAY-Bears barge bulls aside

By Jamie McGeever

ORLANDO, Florida, Feb 12 (Reuters) - Market sentiment soured rapidly on Thursday, sparking a steep selloff in U.S. stocks, precious metals, commodities and cryptocurrencies, as investors flocked to the relative safety of Treasuries, the dollar and Swiss franc.

In my column today, I ask the simple question: what will it take for the Fed to raise rates? Officials and market pricing are still leaning towards further easing, but the case for the next move being a hike is just as strong. Maybe stronger.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. U.S. existing home sales drop to more than two-year low in January

2. Trump rate hopes and CBO budget math don't chime: Mike Dolan

3. Erratic U.S. is spurring "middle powers" into action and investors are noticing

4. EU leaders agree to accelerate single market, in struggle to compete with U.S. and China

5. EXCLUSIVE-U.S.-China trade detente fuels mothballing of key China tech curbs

Today's Key Market Moves

• STOCKS: Main U.S. indices fall 1-2%, Europe in the red too. Asia higher, but likely to open lower on Friday.

• SECTORS/SHARES: Only three S&P 500 sectors rise, utilities +1.5%; Eight sectors fall, tech -2.7%, financials and energy both -2%. Cisco Systems -12%, Apple -5%.

• FX: Dollar rises, but so do yen and Swiss franc. Norwegian crown the biggest G10 decliner on oil weakness.

• BONDS: Treasury yields fall, curve bull flattens. 30-year yield tumbles 9 bps after historic auction. 10-year Bund yield lowest in over two months.

• COMMODITIES/METALS: Precious metals tank, silver -11%, platinum and palladium -5%. Oil -3%, U.S. copper -3%.

Today's Talking Points

Fragile and volatile

Selling begot selling on Thursday, leading to sharp falls on Wall Street and a renewed wave of liquidation in assets that had been pumped up by frenzied speculation in recent months like gold, silver and bitcoin.

Worries over AI's impact on software companies surfaced anew, but there was no clear trigger. This is significant, as it shows how fragile sentiment is, and how stretched positioning still is in certain markets. Perhaps one reassuring element of the shake-out is Treasuries and other government bonds fulfilled their traditional role as the safe-haven of choice.

Going long the long bond

Thursday's $25 billion auction of 30-year U.S. bonds was historic. Bid-to-cover of 2.66 was the highest since January 2018, the 4.75% high yield was 2 bps below the prevailing rate at time of issue, and primary dealers' take of 5.9% was the lowest since at least 2008, according to Exante Data.

Little wonder the 30-year yield tumbled 9 bps, its biggest daily drop since October. Does this suggest dealers expect a soft CPI print on Friday? Or fear wider "risk-off" market turbulence? Maybe. What it does show is there's life in the long bond yet.

U.S.-China tensions thaw ahead of summit

Presidents Donald Trump and Xi Jinping are expected to meet in Beijing in early April, and if current signals are accurate, it will be a cordial summit that could thaw tensions between the two superpowers and ease global trade pressures.

Washington has shelved a number of key tech security measures aimed at Beijing, the yuan is trading at three-year highs against the dollar, and reports suggest the two leaders may extend a trade truce for as long as a year. As U.S. Treasury Secretary Scott Bessent said this week, U.S.-China relations are "in a very comfortable place."

What could move markets tomorrow?

• New Zealand manufacturing PMI (January)

• Taiwan GDP (Q4, revised)

• China house prices (January)

• European Central Bank board member Luis de Guindos speaks

• Euro zone GDP (Q4, flash estimate)

• Germany wholesale inflation (January)

• Bank of England chief economist Huw Pill speaks

• U.S. CPI inflation (January)

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.