Asian Shares Rally – Gold Falls As Markets Breathe Heavy Sigh Of Relief

The “no apocalypse” relief trade is in full effect now.

Having manifested itself early in a dollar rebound and yen weakness, things are getting underway in earnest and the risk-on move is gathering some steam (although as sure as I write this it will turn on a dime).

Here’s the Kospi:

And the Nikkei:

Meanwhile, Treasury yields are rebounding…

“U.S. Treasuries may extend their decline as the North Korean tensions look set to abate further while the U.S. economy remains resilient,” Hideki Shibata, senior rates and currencies strategist at Tokai Tokyo Research Center says on Monday. “The lack of missile action from North Korea on Saturday has prompted investors to unwind their risk-off positions this morning,” Shibata goes on to note before adding that because it’s “unlikely that U.S.-proposed sanctions against North Korea will be adopted straight away [a] UN resolution could be postponed, and a delay would lead to a less tough sanction, which limits reaction from North Korea and eases risk-off sentiment.”

Gold is of course on the back foot:

As noted late last week, things would look quite different on Monday, one way or another. Either there would be a sharp reversal if Kim showed some restraint and Irma showed some mercy or there would be a violent move lower in the dollar and yields if everyone’s worst case scenario materialized.

For now, it’s the former.