- ECB leaves key rates unchanged in July monetary policy decision, as expected
- Lagarde opening statement: Q2 growth was likely slower than Q1
- Lagarde Q&A: Question of what we do in September is wide open, will be data dependent
- ECB sources: Officials consider if only one more cut is feasible in 2024
- Biden may be about to drop out - report
- US initial jobless claims 243K vs 230K estimate. Highest level since August of last year.
- US July Philly Fed +13.9 vs +2.9 expected
- Fed's Goolsbee: I feel 'a lot better' about multiple months of improvement in CPI
- Fed's Logan: We're making progress in getting banks ready to use the discount window
- Washington Post: Biden needs to seriously consider his viabilty
- US June leading indicators -0.2% vs -0.3% expected
- IMF says Fed should wait until at least late 2024 to cut rates
- Von der Leyen re-elected at European Commission but vote split highlights tensions
Markets:
- US 10-year yields up 5.2 bps to 4.198%
- WTI crude oil down 59-cents to $82.27 per barrel
- S&P 500 down 0.8%
- Gold down $15 to $2442
- USD leads, JPY lags
It's anything but a 'summer market' at the moment as volatility stays high, including a 10% jump in the VIX today. That also extended to FX, where the US dollar recovered some of its losses against the yen and then tracked higher as part of a broad USD move. Yields helped to prod the dollar recovery as did an ECB that warned of downside risks to growth.
In truth, the ECB decision was a bit of a dud with rate cut probabilities for September little moved around 65%. The euro tracked 40 pips lower in steady selling that accelerated late with the dollar bid.
The initial jobless claims headline grabbed some attention and sparked worries about the US jobs market but a second look revealed that the number was goosed by the hurricane in Texas and should reverse in the week ahead.
Talk is starting to circulate about next week's US GDP report with the consensus at 1.7%. The risks may be to the upside for the US dollar given that the Atlanta Fed tracker is running a percentage point higher.
The commodity currencies also came under pressure late as the stock market ran into trouble. Gold and oil fell as there are concerns about global growth in the backround. China's announcements from the third plenum didn't offer any details on improving the ailing economy and the official summary doubled down on a state-led, tech-centric focus. We could see some specific policies in the coming days though.
Cable suffered its first real drop this month after failing above 1.3000.
