Market Brief, North America

The dollar is trading below levels that prevailed ahead of Federal Reserve Chair Jerome Powell’s Friday appearance at Jackson Hole. Although markets (briefly) appeared to think otherwise, we read the speech as coming in slightly more dovish than expectations, with repeated use of the phrase “proceed carefully” helping put the central bank on a data-dependent footing into the autumn months. Most major equity indices are up and Treasury yields are slightly lower on an essentially-unchanged monetary policy outlook for the US and the euro area. Commodity-linked currencies are recovering from a short-lived rally that unfolded when China launched half-hearted attempts...

Financial markets are in stasis this morning ahead of a series of monetary policy speeches at the Jackson Hole Economic Symposium. Treasury yields are up slightly and equity futures are licking their wounds after yesterday’s buy-on-rumour, sell-on-news dynamic in Nvidia shares saw the major indexes lose altitude. Trade-weighted measures of the dollar are holding near three-month highs as market participants bet Federal Reserve chair Jerome Powell will deliver a relatively-hawkish “higher for longer” message, followed by a more dovishly-cautious one from the European Central Bank’s Christine Lagarde. Both the euro and pound are oscillating around key technical levels, and modest...

Investor demand for US assets continues to grow at an untrammelled pace this morning as signs of softness emerge in other areas of the global economy. Ten-year Treasury yields are down roughly six basis points to 4.26 percent, but benchmark rates are declining much more rapidly in the UK and euro area after a series of purchasing manager surveys pointed to wider weakness and diminished the case for further monetary tightening. The dollar is stronger against all of its major rivals – with the Japanese yen marking the lone exception. US equity futures are higher ahead of an earnings release...

Treasury markets are pausing for breath after a sell-off that drove yields to post-2007 highs, equity futures are seeing a modestly-stronger tech-powered open, and the dollar is slightly softer against its major counterparts. One-month implied volatility in the equity and currency markets remains depressed relative to history, even as the level of turbulence in Treasury markets hits elevated levels. This is reflective of the extent to which global rates are moving in sync with US yields, but also looks fragile as we move through the typical late-August lull and enter more strained global conditions in the early autumn. We rarely...