- US May housing starts 1.277m vs 1.370m expected
- US initial jobless claims 238K vs 235k estimate
- US June Philly Fed +1.3 vs +5.0 expected
- US sells 5-year TIPS at 2.050%
- France election poll: National Rally leading, Macron lags behind
- White House's Brainard: There is every reason to expect further inflation progress
- EIA weekly crude oil inventories -2547K vs -2200K expected
- Atlanta Fed GDPNow 3.0% vs 3.1% prior
- Eurozone June consumer confidence (flash) -14.0 vs. -13.6 expected
- US CPC: July-Sept temperature outlook favors above-normal temperatures for much of the US
- Fed's Kashkari: It will probably take a year or two to get inflation back to 2%
- US Q1 current account -237.6B vs. -206.4B expected
Markets:
- Gold up $31 to $2358
- US 10-year yields down 3.9 bps to 4.255%
- WTI crude oil up 77-cents to $82.17
- S&P 500 down 0.25%, Nasdaq down 0.8%
- CAD leads, CHF lags
The US dollar was broadly stronger on Thursday but wasn't the focus as the US returned from holiday. Instead it was on European central banks. The Swiss National Bank cut rates for the second time and that led to a reversal in some of the recent franc softness; it also ran headlong into the political risk aversion, which has ebbed lower with French stocks up in three of the past four days.
Still, the euro didn't get much benefit as it fell 40 pips on the day and finished on the lows. Part of that was some creeping risk aversion as Nvidia shares turned a 3% opening gain into a 3.5% loss. For a chart that has carried the market this year, the outside reversal is a worrisome signal:
The yen was also in focus as it fell for the six straight day and is on track to finish at a 34-year closing low. Some of that was the SNB move but it's also about the market increasingly believing that inflation is yesterday's story, meaning that the BOJ will have a tough time hiking rates. In addition, trouble at a Japanese bank is causing concern. We're certainly in intervention watch now with 160.00 just over 100 pips away.
USD/CAD was able to buck strength in the US dollar and softness in commodity currencies. Some of that came with the help of a tighter US oil inventory report and climb in oil prices to a six-week high.
Tomorrow, eyes will remain on bonds along with quad witching in stocks.
