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The selloff in bonds continues on US government drama. The sell-off in US 10-year papers accelerated yesterday and the 10-year yield spiked to 2.64%. The 2-year yield however, which captures the expectations on Federal Reserve (Fed) actions remain steady a touch above the 5% mark, on slow down worries on all the government and Detroit drama.
Volatility in US bond markets is rising, and the US dollar continues to amass major safe haven demands. Gold slipped below the $1900 per ounce.
In equities, energy and technology stocks helped the S&P500 limit losses yesterday. The energy sector was up as crude...

Investors continue to dump stocks and buy US dollars on looming uncertainty regarding whether the US government will be shut in three days. There is progress regarding a 6-week short-term funding deal, but getting an approval from the Senate will be a challenge.
The looming government shutdown talks continue feeding into a stronger US dollar.
The S&P500 fell to the lowest levels since the beginning of June and the Stoxx 600 could slip below 445 due to slowing European activity, waning Chinese demand, the European Central Bank’s (ECB) pledge to keep the monetary policy tight until inflation comes down significantly....

The US yields rose, and the dollar extended gains yesterday as the looming US government shutdown drama got the only remaining big rating agency company Moody’s to sound cautious about the US’ AAA rating. The US 10-year yield advanced past the 4.55% level, the US dollar and the S&P500 gained.
Yesterday’s renewed dollar rally pushed the EURUSD below a critical Fibonacci level yesterday, sterling, franc, and yen also extended losses against the greenback. Gold’s trend and momentum indicators turned negative, and the precious metal is about to show a death cross formation on daily chart.
In energy, the barrel of...

The week started on a cautious note as stocks in Asia mostly sold off following a rough week in the US, where the Federal Reserve’s (Fed) hawkish pause triggered a fresh wave of worries that the rates would stay higher for longer. The yields pushed higher as the S&P500 recorded the worst performance over the week since the banking crisis in March.
The UAW strikes will broaden to all GM and Stellantis parts plants in the US, which means that 5600 more workers will join the movement (Ford will likely be spared, for now, as some good progress is made...

The Swiss National Bank (SNB) and the Bank of England (BoE) surprised by maintaining their rates unchanged at yesterday’s trading session. The Bank of Japan (BoJ) surprised by maintaining its ultra-lose monetary policy stance unchanged. Combined with a hawkish pause earlier this week, the major currencies further sank against the greenback. I think that the BoE decision was premature, and the bank will be obliged to hike more in the coming meetings.
But uf there is one bright spot in Britain, it is the FTSE100, supported by cheaper sterling and higher energy prices, as the US technology stocks are set...

The Federal Reserve (Fed) maintained interest rates unchanged, as expected. It revised its growth forecast higher, as expected. The dot plot showed one more rate hike before the end of this year, and less cuts next year.
The Fed announcement was hawkish, without much surprise. The market reaction was smooth and unsurprising, as well. Yields and the dollar gained, stocks fell.
Today, it’s the Bank of England’s (BoE) turn to decide. Up until yesterday, the expectation was an almost certain 25bp hike, but yesterday’s shocker inflation data has shaken these expectations to 50-50.
Elsewhere, the barrel of US crude fell...

The Federal Reserve (Fed) will announce its latest policy decision and reveal revised growth and inflation forecasts today.
The Fed is broadly expected to keep the interest rates unchanged; the policymakers will likely sound satisfied with the progress on inflation, and they could revise their growth forecasts significantly higher. Strong growth forecast could trigger a fresh wave of hawkish trades across stock, bond, and currency markets. But the reaction is not a given as the US economy gives signs of exhaustion and recession is still on the cards. So if you see the US dollar sold after a hawkish Fed...

Strikes at GM, Ford and Stellantis factories dampened overall market sentiment on Monday. The walkout led by United Auto Workers (UAW) began last Friday and saw little progress.
GM, Ford and Stellantis fell yesterday. The barrel of US crude traded past the $92 level, as Brent crude advanced past $95pb.
This week, the US policymakers will certainly opt for a ‘hawkish pause’. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth. The US dollar index tested the important 38.2% Fibonacci resistance last week, especially after the euro sold off...

The European Central Bank (ECB) raised interest rates by 25bp yet the euro sold off. In fact, many euro bears also jumped on a trade yesterday as Lagarde announced that the ECB significantly pulled its economic projections to the downside. BUT, in the meantime, the ECB revised its inflation expectations higher as well. Therefore, it’s naïve to think that the ECB can’t continue hiking rates with such a sour economic outlook, especially when the barrel of US crude trades past $91pb, and Brent is getting ready to test $95pb.
Rising oil prices are not benign, but the hawkish ECB is...

Yesterday’s US CPI report was mixed, worse-than-expected and far from soothing. The headline inflation ticked from 3.2% to 3.7%, higher than the 3.6% expected, and core inflation came in at 4.3%, in line with expectations. But on a monthly basis, core inflation numbers was slightly higher than expected. The US 2-year yield was shortly above the 5% level yesterday but fell after the data, activity on Fed funds futures now gives 97% chance for a pause at next week’s FOMC meeting, but the probability of a pause in November is slightly less than before the data, at 56%.
Across the...