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The beautifully distracting game

Of all the rituals of finance most ripe for disruption by artificial intelligence, few are as deserving as the quadrennial spectacle of sell-side World Cup analysis. Like clockwork, the world’s biggest banks deploy teams of economists and quants to divine the tournament’s champion and tally the macroeconomic spoils. Thousands of pages and reams of data visualisations later*, they reach a conclusion a chatbot could have supplied for free: host the tournament, or field a side in the final rounds, and enjoy a modest, fleeting bump to gross domestic product as fans throng the bars. No bank reliably picks the winner;...

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Dollar advances as financial conditions tighten and risk aversion sets in

Good morning. The dollar is trading near a two-month high, lifted by three forces pulling in the same direction: a blockbuster payrolls report that has triggered a hawkish reappraisal of the Federal Reserve’s likely policy trajectory, a meltdown in technology stocks, and an intensifying conflict in the Middle East that is raising inflation risks further. Treasury yields are holding at elevated levels after Friday’s payrolls print convinced investors that inflation remains a bigger risk than unemployment*. The economy added 172,000 jobs in May—more than double the consensus forecast of 85,000—and the unemployment rate ticked lower. Diffusion indices showed more industries...

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Markets reverse lower ahead of key payrolls report

Markets are turning defensive ahead of the weekend as the war in the Middle East shows little sign of progress and investors grow more cautious on artificial-intelligence stocks. Brent and West Texas Intermediate crude look set to post their first weekly gains in three weeks after Hezbollah rejected a new ceasefire in Lebanon and Israel said it would maintain its troop presence in the country, undermining President Trump’s efforts to negotiate a face-saving exit from the conflict with Tehran. Equity futures are pointing to losses at the open after Broadcom, the semiconductor developer, beat quarterly earnings expectations but forecast disappointing...

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Another Iran escalation whipsaws markets

Good morning, and happy Groundhog Day*. The dollar is strengthening and Treasury yields are rising as diplomatic efforts to reopen the Strait of Hormuz falter once again. Iran and the United States said last week they had reached a tentative deal to halt the war, but nothing has been signed and events on the ground moved in the opposite direction overnight: Iranian missiles damaged Kuwait’s airport and targeted Bahrain, attacks on commercial shipping resumed, US forces carried out strikes in response, and Israel continued its assault on Lebanese towns despite an American-brokered ceasefire. Both global crude benchmarks are up more...

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Global inflation pressures building

• Holding on. Modest financial market moves. US equities & oil tick up. NZD a bit softer. AUD edges up slightly & outperforms on the crosses.• Data flow. More signs US jobs market is holding up. EZ inflation quickens, raising odds of an ECB rate hike next week. AU Q1 GDP released today. Global Trends A fairly quiet 24hrs across markets with modest net moves coming through across most asset classes. US equities nudged up (S&P500 +0.1%), US bond yields consolidated, oil rose slightly (WTI crude +1.4%), and the major currencies tread water with EUR drifting sideways (now ~$1.1630), USD/JPY...

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