- Timiraos: Higher long-end yields likely to extend Fed pause
- NY Fed year-ahead inflation 3.7% vs 3.6% previously
- Fed's Bostic: Inflation has improved considerably, still a long way to go
- Fed's Kashkari: Inflation is headed down
- US August wholesale sales +1.8% vs +0.5% expected
- Fed's Waller: Will 'stay on the job' to achieve 2% inflation objective
- The US treasury sells $46 billion of 3-year notes at a high yield of 4.74%
- Atlanta Fed GDPNow estimate for Q3 growth rises to 5.1% from 4.9% previously
- Biden: American citizens are among those being held by Hamas
- NY Fed markets chief: No sign yet Fed needs to change balance sheet plans
Markets:
- Gold down $1 to $1859
- US 10-year yields down 12.9 bps to 4.65%
- WTI crude down 59-cents to $85.79
- S&P 500 up 0.6%
- GBP leads, JPY lags
The levers that are driving markets remain elusive and that was especially true today on a day that didn't have any real fundamental news. Instead it was a time for the bond market to re-awaken after yesterday's holiday and that was ultimately what FX keyed off. US yields had risen from the lows in Europe but as the full force of US liquidity arrived, bids returned and yields fell 10-12 bps across the curve, returning near the initial-opening lows.
That weighed on the US dollar as EUR/USD rose to challenge 1.0620 and cable tested 1.2300 before falling just short. Some dollar bids arrived later as risk appetite waned and that limited dollar moves elsewhere.
AUD/USD was upbeat as China stimulus talk re-emerged and it's near the highs of the day is trading winds down, up 30 pips from the US lows.
CAD is less enthusiastic as it sorts itself out after yesterday's Canadian holiday and the jump in oil prices. It's chopping in the 1.3580-1.3600 range and near the bottom of it.
USD/CAD rose above 149.00 early in New York but couldn't sustain a bid above the figure and slowly tracked to 148.65.
Overall, there's a constant refrain -- including from the Fed's Kashkari today -- that we don't know what's driving up the term premium in bonds. The awful events in Israel on the weekend further muddy the market waters as we await Thursday's US CPI report.
