Asia Pacific markets were mixed after US equities saw steep declines, with the Dow, the S&P, and the Nasdaq, off by 1%, 1.3%, and 1.6% respectively. Risk appetite turned after Federal Reserve Chairman Ben Bernanke told congress that the" economic outlook remains unusually uncertain," and that the Fed was ready to implement further monetary easing if the recovery falters. Although the remarks were largely in line with the latest FOMC minutes released last week, equity bourses fell sharply as nervous investors scaled back positions on concerns that the Fed seemed to lack confidence in the direction the recovery. Treasury yields fell to record lows with the 2-year bond dipping to .56. In the Asian session, markets lacked proper footing with the Nikkei 225 and the S&P/ASX 200 index closing lower by .6%, and .9% respectively, while the Hang Seng index nudged higher by .5%. The Shanghai SE composite was one of the strongest performers, climbing more than 1% on lingering optimism that China will continue moderately loose monetary policy in the second half of 2010.

European markets rallied after reports today showed a surge in the pace of growth in the region, with both German and Eurozone Manufacturing /Service PMI figures beating consensus estimates. Fueling the rally was better than expected industrial orders, with new orders crushing forecasts with a gain of 3.8%. Markets were looking for a reading of -.1% from 0.9% the previous month. Commodities advanced with crude oil advancing 1% to $77.05 per barrel, albeit remaining in check on rising US inventories. Gold recouped early losses to trade at $1187 per ounce, but remains heavy after falling more than 6% from its record high last month at $1265.

Commodity currencies were the beneficiary of improved risk appetite with the aussie and the loonie posting broad gains. The aussie was the best G7 performer versus the greenback, advancing more than 1.1% to a 2-month high, trading just below the .89 handle. The dollar was softer against all the majors, with the index falling by .6% to 82.78 on increasing concerns regarding domestic growth prospects and the health of the economic recovery.

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