EUR
Weapons of mass disruption
In 1939, after the Soviets invaded Poland, Winston Churchill told radio audiences, “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest.” We find ourselves in a similar position. We cannot predict what Russia will do in the coming days, let alone the coming months. We’re not even sure the key is Russian national interest: Vladimir Putin’s actions in recent years would suggest he is driven by other motives. We worry, however, that the world looks increasingly vulnerable...
Another US government shutdown looming?
• Negative vibes. Bond yields eased back & US equities continued to lose steam. The global PMIs illustrated ongoing sluggish growth momentum.• USD mixed. GBP remains on the backfoot as markets price in ‘peak’ rates. USD/JPY rose after the BoJ held steady. AUD ticked a bit higher.• Event radar. Locally, monthly CPI & retail sales due this week. Offshore, EZ CPI & US PCE data released. Risk of another US government shutdown also rising. The upswing in bond yields paused for breath on Friday and equity markets continued to lose steam. US and UK 10yr yields ended Friday ~6bps lower...
US exceptionalism trade regains momentum
A bruising week for global Wall Street continues this morning, with the dollar holding steady and major indices paring gains into the North American open. Ten-year Treasury yields are inching slightly lower after climbing to a 16-year high in yesterday’s session, paying more than 4.5 percent at one point. The moves came after the Federal Reserve on Wednesday issued forecasts showing rate cuts happening at a slower and more incremental pace than markets had previously anticipated, and after another weekly claims report beat expectations, suggesting that labour markets remain far from cooling. The number of initial applications for unemployment benefits fell...
Bond yields keep rising
• Negative sentiment. Fed’s ‘higher for longer’ forecasts have continued to wash through. Long-end bond yields rose again. Equities dipped. USD consolidated.• BoE surprise. Following the weaker UK CPI the BoE surprised by keeping rates on hold. GBP weakened with markets starting to price in a rates ‘peak’.• AUD softer. AUD slipped back over the past 24hrs. AUD/JPY has fallen by ~1%. The BoJ is today. Could it spring a ‘hawkish’ surprise? Risk markets have generally remained on the defensive with long-end bond yields continuing to push higher as the US Fed’s ‘higher for longer’ mantra continues to sink in....