• Gold up $17 to $1962
  • US 10-year yields down 18 bps to 4.45%
  • WTI crude oil up 1-cent to $78.27
  • S&P 500 up 2.0%
  • Russell 2000 up 5.3%
  • NZD leads, USD lags

What a day.

The US CPI numbers were 0.1 pp lower across the board but the market reaction was much larger than that as markets closed the book on the possibility of Fed rate hikes and priced in short order, including a 90% chance of a cut on May 1.

The US dollar sank 60 pips on the CPI headlines and then continued to fall, leading to some of the biggest declines of the year. Cable climbed 215 pips to crest above 1.2500 while the euro nearly touched 1.09. The biggest gainers were the antipodeans with NZD/USD up 2.3% to 0.6000 and AUD/USD rising above 0.6500 ahead of some key China data today and the Xi-Biden meeting this week.

Bonds were a major catalyst with the recent lows in yields giving way and declines of 11-25 bps across the curve. Fives are back to where they were in August, unwinding some of the help the Fed has been touting from the market.

Tomorrow we get retail sales and PPI data and I'll be interested to see if FOMC officials try to push back against today's market narrative, which surely has an element of a squeeze to go along with it.

FX news wrap Nov 14