- US August new home sales 800K vs 650K expected
- Trump presented Arab leaders with a outline for ending Gaza war - report
- G7 countries considering price floors for rare earth production to counter China.
- BOEs Greene:Monetary policy makers tend to look through supply shocks.May need to rethink.
- EIA weekly crude oil inventories -607K vs +235K expected
- Copper prices jump after Freeport details mudrush incident -- impact could stretch to 2027
- Canada August flash manufacturing sales -1.5% m/m
- US Bessent: Fed has been too high for too long
Markets:
- Gold down $41 to $3722
- WTI crude up $1.40 to $64.81
- US 10-year yields up 2.9 bps to 4.15%
- S&P 500 down 0.3%
- USD leads, JPY lags
The moves in markets today were in FX as the US dollar strengthened solidly, particularly against the yen. There wasn't really a catalyst for the move, or at least one we could find. Powell yesterday was dovish, though you could also point to a comment or two from him about inflation. The Fed funds futures market took out about 2.5 bps of easing in the year ahead but that's hardly enough to justify the large dollar move, which was led by a 125 pip move versus the yen but was broad and consistent.
It looks more like flows with something of a squeeze involved. There is some optimism about better growth next year in light of equity market gains so that could be factoring in as well but I'd mostly chalk it up to the ebb and flow.
The new home sales number was certainly a good one for the dollar but it was met with immediate skepticism as home builder sentiment numbers haven't shown any kind of jump in optimism, and that's a more-timely survey. Rates also didn't fall in August, which was the survey period. If sustained though, it could be a gamechanger in a sector of the economy that's been in a deep recession.
Oil prices were strong while gold was weak in a reversal of the trend of 2025. The crude rise is benefiting from worries about more attacks on Russian infrastructure.
Equity markets dipped lower as some of the high flying tech names like Oracle saw some profit taking. Big tech names sagged and Micron was down 2.6% after reporting earnings.
