Treasury yields finished at/near the day’s richest levels even as Fed Chair Powell and his G3 colleagues warned of further tightening ahead. However, there were no new insights there to allow dip buyers to provide support. There was also some front-running of month- and quarter-end demand, as well as rebalancing flows given the outperformance of equities (thanks AI) over Treasuries this quarter. Stock markets traded mixed overnight and while European futures are down, US futures have found buyers. Markets are still weighing central bank comments from yesterday. Governor Ueda seemed to signal the possibility of a policy shift next year. Reuters reporting that China’s major state-owned banks were seen selling dollars again today in exchange for the yuan in the onshore market.
- FX – The USDIndex cleared the 103 mark after hawkish comments from Powell yesterday. USDJPY is still at 144.56. GBP and EUR slumped on concerns over their economies with more rate hikes ahead.
- Stocks – The US100 pulled back slightly today but holds above $4400. Bank of America Corp. and Wells Fargo & Co. were higher as the biggest lenders passed the Fed’s stress test, clearing the way for payouts. All 23 examined banks passed despite projected losses of $541 billion.
- Commodities – USOil is slightly lower from yesterday’s highs at $69.75 as the 2nd weekly draw from US crude stockpiles was bigger than expected, offsetting worries that further interest rate hikes could slow economic growth and reduce global oil demand.
- Gold – extended lower to $1902 area.
Today – Eurozone Economic Confidence, Consumer Confidence, US GDP, Initial Jobless Claims.
Biggest Mover @ (06:30 GMT) Cocoa (+2.46%) rallied to 3344. Fast MAs flattened, but MACD lines are still positively configured with RSI at 80.75 and Stochastic at 91 and rising.
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Andria Pichidi
Market Analyst
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