- FOMC minutes: Participants 'concurred' that inflation outlook had deteriorated
- ISM June non-manufacturing index 55.3 vs 54.3 expected
- Boris Johnson wants to go down fighting
- IMF's Georgieva says outlook has 'darkened significantly' since April
- 1922 Committee now in disarray, will elect new executive on Monday
- JOLTS May US job openings 11.254m vs 11.00m expected
Markets:
- Gold down $23 to $1739
- WTI crude oil down 99-cents to $98.52
- US 10-year yields up 12 bps to 2.93%
- S&P 500 up 13 points to 3845
- USD leads, EUR lags
In all the drama elsewhere, another 20-year low in the euro barely got any attention as it skids towards parity. The damage was done early in Europe but it made a new low of 1.0161 just after the ISM services data, which was certainly stronger than the non-stop recession talk would lead you to believe. The prices component edged lower but remained at a high level and the comments in the report highlighted the issue repeatedly.
After the ISM report there was a change in tone in the bond market. I wouldn't put that necessarily on the data but four days of declining yields turned around in a hurry with rates up 10-16 bps in a flattener that pushed 2s10s to a worrisome 5 bps inversion.
The reversal higher in yields helped to sustain a USD/JPY bid after the ISM data, erasing an earlier loss. The pair finished flat on the day and it's been curiously quiet now for awhile.
The pound struggled laggard as the political turmoil combined with the intense bearishness that's settling around Europe. German chancellor Scholz said that no one believes that maintenance is what's keeping Russian gas down today and to me that's confirmation. What's striking is that not even a political crisis can keep EUR/GBP from dropping. At this point it's assumed that Boris Johnson is done with betting odds putting it at a certainty. Safe to say it's priced in.
Oil took another nasty dive early in US trade after rising by more than $3 in Asia. It finally found support just above $95 in what had been a $16 drop in less than 48 hours. The loonie took it in stride and didn't break yesterday's 2022 high of 1.3081, though it was challenged. Oil bounced late on Iran headlines and USD/CAD drifted down to 1.3039.
