- Nord Stream 1 seen restarting flows as scheduled but at reduced levels - report
- BOE's Bailey: 50 basis points will be on the table at the next MPC
- UK race to be PM is down to three as Kemi Badenoch eliminated
- US June housing starts 1.559m vs 1.580m expected
- Delaware judge rules that expedited Twitter-Elon Musk trial can go ahead in October
- Pentultimate Atlanta Fed GDPNow forecast for Q2 is -1.6%
- Haliburton highlights how it will be difficult to add more oil in 2023
- Germany will wait until at least Monday before hitting the panic button on Nord Stream
Markets:
- Gold up $3 to $1711
- US 10-year yields up 6 bps to 3.02%
- WTI crude oil up $1.50 to $104.10
- S&P 500 up 110 points to 3943
- Nasdaq up 3.1%
- AUD leads, JPY lags
The Nord Stream news is mostly good, although the caveat is that pipeline flows will be curbed and the Krelim hasn't made a final decision. It's clear that Europe will have to live with some kind of rationing and high prices for many months to come but at least (hopefully) there won't be a sudden stop in supplies.
That news gave a big lift to European stocks but not as much to the euro. The ECB decision on Thursday is keeping markets cautious along with anti-fragmentation confusion and Italian political drama. Still, the euro added 80 pips today as it moves further away from parity.
The UK news is all about the heatwave right now bets that Liz Truss will become the next PM sizzled as well on Tuesday after a poll of Conservative voters showed her well ahead of Sunak. We'll find out tomorrow who will be the final two in the race. The rally in cable to 1.2000 was more about dollar selling than anything domestic.
The big winners on the day were AUD and NZD on a better global outlook. I keep going back to the BofA institutional survey as a tell for many traders. Risk taking sentiment was the worst since the depths of the financial crisis and that was a sign for many that sentiment can't get any worse.
It looks like Waller blinking at 100 bps will be the catalyst for at least a short-term bottom. Yesterday the market came undone on worries about Apple halting hiring but today it steadied itself and dragged along the commodity currencies as money left the dollar-haven trade. The rise after hours in NFLX shares will contribute to that.
USD/JPY sank to 107.50 but rebounded all the way back to unchanged at 138.23.The pair will be the major focus of the upcoming Asia-Pacific session with the BOJ set to decide on policy. Last month there was plenty of fear they'd abandon yield curve control but that's died down now. Does that set up a surprise?
