Market News Today – Treasury yields have moved up 0.7 bp to 1.36% overnight, and yields are also higher in Australia and New Zealand after hawkish Fedspeak and an improvement in risk appetite saw the bullish trend for bonds fade yesterday. Many analysts see a possible announcement in September, though November or December seems more likely. Virus developments made for a mixed session for regional stock markets, however, the revival of reflation trades boosted the USA30 to 0.46% and USA500 to 0.1%, with the former at a new record peak. The Senate passage of the $1 tln infrastructure deal also supported at the margin. But the USA100 lagged with a -0.49% loss amid the rise in interest rates.
In Europe, the September 10-year Bund future is down -9 ticks, slightly outperforming versus US futures, but thanks to the ECB’s very dovish guidance on the rate outlook, Bunds have remained supported, despite a slump in German ZEW investor confidence, although peripherals managed to hang on to fractional gains and Eurozone spreads narrowed slightly as the data will back the dovish camp at the ECB.
The ECB’s dovish stance, which contrasts with the BoE’s hawkish turn on the rate outlook and tapering talk at the Fed is also keeping a lid on the EUR.
In FX markets the USD was steady to higher and USDJPY lifted to 110.74. EURUSD is little changed at 1.1706. GBPUSD corrected to 1.3819 amid a largely stronger USD. GER30 and UK100 futures are up 0.02% and 0.13% respectively, US futures narrowly mixed. USOIL meanwhile is trading at $68.42 per barrel.
Today – Today’s calendar focuses on final inflation readings for July for Germany and Italy. More important for markets will likely be the US inflation report.
Biggest Mover @ (06:30 GMT AUDUSD -0.26%) drifted to S1 at 0.7324 from 0.7349 highs. Faster MAs turned sharply southwards and MACD lines turning below zero even though signal line holds positive. Next support stands at 0.7300. H1 ATR 0.00061, Daily ATR 0.0050.
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Andria Pichidi
Market Analyst
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