The US is off today in observance of the Thanksgiving Day holiday, but that does not stop the forex market as it maintains bid/ask pricing and the potential for up and down activity.

Of course there is no economic data coming out but there is some World Cup Soccer.... ok Football... to keep traders busy at their desks in Europe (or in the pub). Switzerland vs Cameroon, Uruguay vs So. Korea, Portugal vs Ghana, and Brazil vs Serbia are all on the schedule today with Uruguay vs So. Korea just starting (or scheduled to start).

I guess if correlations between bitcoin and other crypto currency coins can be made to interest rates, stock prices, forex rates, why not a Ghana defeat of Portugal?. Japan's win vs Germany sent the JPY higher, right.

A little known fact, my middle son is a professional football coach on the college level, but the American football variety. We got to see him as his Oregon State Beavers were in town last weekend to take on the Arizona State Sun Devils. It was Homecoming for ASU, and also a Homecoming (in the college sense) for my son as he attended ASU and started his coaching career as an "apprentice" there. Along his journey, he did coach football in Germany for the Cologne Falcons. That indeed was an American Football team. He did not do a Ted Lasso before Ted Lasso. The Beavers won on Saturday. Go Beavs!

Oregon State
Coach Mike of the Oregon State Beavers

Looking at the forex market, the JPY is still riding the win vs Germany and is the strongest of the major currencies today. The CHF is the weakest. The USD is mostly lower with small gains only vs the CHF and CAD.

The strongest to the weakest of the major currencies

Yesterday, the greenback was the weakest of the majors after stronger Durable goods and new home sales, were trumped by the more timely - and much weaker - initial jobless claims and S&P Global flash PMI estimates (for manufacturing and services). The Fed Minutes also confirmed what we know, that the pace of hikes was to slow as the Fed enters more and more into the restrictive range for the Fed Funds rate. It is still up in the air what happens after that. Does the lag impact send inflation lower? Does inflation stay lower or are we in a new normal where inflation falls and rises more and more?

The 2-10 year spread has never been so negative (at least going back to 1988 where my data stops) at -77 basis points. An inverted yield curve is a signal for a recession down the road. From an economic view, the storyline would be the "Fed overtightens. The economy slows, Inflation slows. Unemployment rises. Earnings go lower. Stocks fall(?).".

2-10 year
2-10 year US spread is at it's most inverted

However, it is not normal times. Markets and economies are still dealing with the the impacts from Covid, and supply chains, and overspeculation, and too much money sloshing around in stuff like made up crypto coins, NFTs, real estate, etc. . There seems to be some lacks in oversite. There are geopolitical tensions. There are aging baby boomers and its impact on supply of workers, and shortages of housing and income disparities and the political divides. Much to be thankful for, right?

What we know is the markets and prices do look to balance the boats in the rising and falling tides. Right now, the dollar has lost it luster a bit as perhaps the markets are weighing the idea that lowering imported inflation in "other" non-US economies is preferred to doing the same in the US as inflation does seem to be ebbing a bit in the US and the Fed's playbook seems to be written, with the market "fully in the know".

In other markets:

In the European equity markets, the indices are modestly higher:

  • German Dax, +0.72%
  • France's CAC +0.35%
  • UK FTSE 100 +0.10%
  • Spain's Ibex, +0.64%
  • Italy's FTSE MIB +0.10%

In the European debt market, the benchmark 10 year yields are lower. The UK 10 year is back below the 3% level at 2.97% after trading as high as 4.63% during the peak of the Truss issues. The German 10 year is back at 1.85% after trading as high as 2.532% at it's peak.

Europe 10 year
Europe 10 year yield