- Pelosi's plane lands in Taiwan
- US June JOLTS 10.698m vs 11.00m expected
- Canada July S&P Global manufacturing PMI 52.5 vs 54.6 prior
- Fed's Evans: 50 bps in Sept is a reasonable assessment, 75 is also ok
- Fed's Mester: Does not believe we are in a recession
- Fed's Daly: Work on inflation is nowhere near 'almost done'
- China statement: Pelosi's visit violates the One China principle
- A confusing tweet from former China-state mouthpiece is hitting risk assets
- The China-Taiwan danger isn't over. Drills surrounding the island will begin Aug 4
- OPEC+ JTC trims 2022 oil market surplus forecast by 200-800k bpd - report
Markets:
- Gold down $9 to $1762
- US 10-year yields up 15 bps to 2.75%
- WTI crude oil up 49-cents to $94.37
- S&P 500 down 26 points to 4091
- USD leads, AUD lags
The drama around Nancy Pelosi's flight to Taiwan created a new kind of drama for market participants as we all watched flight trackers and waited for statements. It's tough to guess how much of a weighting in the risk trade was on it but the Taiwan ETF offered a good measure. It was down 1% at the tensest moments and returned to flat afterwards. So not a big deal elsewhere.
At the same time, there was some definite buying in risk assets when she touched down so it was tough to ignore altogether.
Undoubtedly though, the Fed is the main driver in markets and the pushback from a trio of Fed Presidents helped to boost the dollar and Treasury yields. US 10s traded as low as 2.51% before jumping to 2.77% and that move leaves a splash of green on the chart after a long downtrend.
It also threatens to upend some of the recent thinking in the market around the FOMC and a dovish turn.
USD/JPY didn't match the outside day on the 10y chart but challenged 1.30 before finishing close to 1.33 as the big moves continue.
AUD/USD was another mover as the pair fell after the RBA decision. It bounced 40 pips into the London close on positive sentiment post-Pelosi but later gave nearly all of it back.
