Back-to-back quarterly GDP contractions. By technical definition, the US is in a recession but not officially by their standards. I'm not going to go into that debate but the fact of the matter is, the economic slowdown is dragging and with consumer spending dropping to its worst in two years, that is signal enough that there are major concerns as inflation remains high.

The advanced US Q2 GDP report yesterday stoked fears that the timeline of the global economic slowdown is much quicker than anticipated. Even if Fed policymakers and Biden may deny that, the numbers speak for itself. Sure, the labour market is still solid but that has always been a lagging indicator to some extent.

In any case, markets were quick to cast their votes as bond yields tumbled alongside the dollar - after some pushing and pulling. As for stocks, bad news is good news - at least to a certain degree. This comes as markets pare back pricing for a 75 bps rate hike by the Fed for September. Fed fund futures now shows odds of that being at ~23%.

While market players will debate on recession semantics before the end of the week, we will get a slew of Q2 GDP releases in Europe later today. That will also set the tone for the euro after some dismal economic data in the past few weeks.