DAX 40

Key insight

The Fed held rates and the bond market responded by pricing a policy mistake — the 30-year Treasury yield surged to 5.2%, its highest since 2007, creating overnight headwinds for DAX futures even as domestic earnings (Deutsche Bank, RWE, BASF) beat expectations today.

DAX is consolidating ~2.1% below its all-time high of 25,900.10 (July 6), caught between strong Q2 earnings tailwinds and a post-Fed bond market shock that sent the 10-year Treasury yield above 4.67% after the European close.

Main risk

Fed Hold + Bond Market Shock (10Y Treasury above 4.67%)

The FOMC kept rates unchanged and the bond market immediately signalled the Fed may be falling behind the inflation fight, with the 30-year yield hitting 5.2% — its highest since 2007 — after the European close, a negative overnight signal for risk assets including the DAX.