It’s a bit of pick and mix for explanations regarding market moves in the last 24 hours. There has been no top tier economic data, no new speeches, or surprises. But, equities tumbled, commodities are soft, yields are lower and the USD has regained its strength. Market measures of risk aversion and volatility are higher and there is a general sense of unease pervading the moves.

A Reuters poll shows that 41 of 80 economists believe that the Fed should have hiked last week (to be fair, consistent with the pre-FOMC polls).  This is along the same theme as a number of reports in the press, that the ensuing uncertainty is creating this market unease, and particularly the sell-off in emerging market currencies. A majority believe that the Fed will hike this year, but we are just now left unable to move on from the “when” debate and “what” will happen to markets when they do.

There is also pressure on commodities and thus commodity producers (Brazil’s real is the worst performing currency and commodity producer equities are under pressure) given the uncertainty about global growth and what is happening in China. That comes with no new information from China yet this week and which indeed has been relative stable. The AUD has been a little softer overnight, but if this theme catches on, it could be expected to underperform.

Another factor given for the equity market weakness is the revelations from VW that their emissions systems provided a misleading reading. This has sparked investigations in many jurisdictions as it is said to affect 11 million vehicles globally. It is being touted as having the potential to weigh on German GDP as sales dry up. But to apply that to broader markets is such a long bow that it gives us a sense that markets are generally spooked.

In the UK, public sector net borrowing was higher than expected, due to lower income tax receipts, and lead to the highest August borrowing for three years (thanks to my UK colleague Gavin Friend for details). Combine this news with the UK’s CBI industrial trend orders which were particularly weak, and GBP was the underperforming G10 currency for the day.

Coming Up

Another quiet day in Australia today, with only second tier data and little guide from offshore. If the last two days are any guide, it is likely to be quiet.

Japan remains on holiday, China’s Xi is visiting the US and its markets are generally stable, and there is no market moving data in the US. We may need to wait until later in the week for anything concrete to work with.

There is the potential for some market movement when China releases its early PMI, in the form of the Caixin PMI. This is expected to incrementally improve, but remain below the 50 breakeven level between growth and contraction.

The early PMIs for the US and Germany are also released today, with the Markit series. These have been growing in importance and thus may become market moving if it is away from expectations. The US series have been disappointing of late, so a better outcome would be relatively more interesting for markets.

The German series is less interesting in that it comes after the ZEW and just before the IFO- both well established series. A pullback is nonetheless expected.

The Fed speak fest continues, but after the deluge post the FOMC meeting, some fatigue can be expected. This is particularly true given it is Lockhart again, twice! This morning and tonight. We will wait for Yellen to perhaps provide something else on Friday; although if she counters all the hawkish talk this week, there will be even more confusion than there has already been this week.

Overnight

On global stock markets, the S&P 500 was -1.30%. Bond markets saw US 10-years -6.40bp to 2.14%. On commodity markets, Brent crude oil +0.14% to $48.99, gold-0.7% to $1,125, iron ore -1.9% to $56.21. AUD is at 0.7085 and the range was 0.7057 to 0.7159.

• UK net borrowing 11.3bnA, 8.8E, -0.1P
• UK CBI trends orders -7A, 0E, -1P

For full analysis, download report:

• Markets Today: 23 September 2015 (PDF, 315KB)

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