- US June consumer confidence 98.7 vs 100.4 expected
- Richmond Fed June manufacturing index -19 vs -5 prior
- Fed's Daly: Demand is about half the cause of inflation
- Fed's Williams: Recession is not my base case
- US April CaseShiller 20-city house price index +1.8% vs +2.0% expected
- US May advance goods trade balance -104.3B vs -105.94B prior
- US May wholesale inventories +2.0% vs +2.1% prior
- Agreement reached with Turkey to unblock Finland and Sweden NATO membership
- US Treasury sells 7-year notes 3.280% vs 3.259% WI
- US officials to discuss price cap on Russian oil with nations in Africa and Latin America
- US May manufacturing output revised to -0.2% from -0.1%
- Fed's Bullard publishes essay on 'getting ahead of US inflation'
- Dallas Fed June Texas service sector outlook -12.4 vs +1.5 prior
- Sturgeon aims to hold another Scottish independence referendum on Oct 19, 2023
- EIA says US oil storage report will be released Wednesday
- Gold down $4 to $1819
- WTI crude down $2.12 to $111.66
- US 10-year yields flat at 3.196%
- S&P 500 down 2%, Nasdaq down 3%
- USD leads, NZD lags
There was a bit of bifurcation in markets today as equities dumped while bonds traded sideways. In FX, the dollar was strongly bid while the yen slumped despite the flight to safety. You wouldn't normally expect AUD/JPY to be up 25 pips on a day when the Nasdaq fell 3%.
You also wouldn't expect a strong dollar rally to start immediately after a poor reading on consumer confidence and from the Richmond Fed. But the dollar surged into the London fix. That and a look at the calendar might be a clue on what's going on. We're into some major quarter-end flows and Citi's model is showing strong USD buying and that's exactly what took place today.
The bond market continues to reel off auction tails but they're shrugged off with some pointing to falling Japanese demand due to the yen drop along with high hedging costs. Whatever the reason, tails that would have upended the market months ago are ignored.
The Canadian dollar was able to keep pace with USD as oil prices rose for the third day. AUD wasn't far behind and other sensitive spots like steel aren't pointing to a global growth slump as the catalyst for some of the moves today.
I wouldn't overthink this one as it's T-2 before quarter end for stocks. Still, we might not be at the end of it with three more days of trading to go in Q2