The USD is mixed to start the North American session. There is no give in the Senate vote to reopen the US government. As a result there will be no economic releases.
A snapshot of the USD changes vs the major currencies shows the dollar changes of:
- EUR +0.05%
- JPY unchanged
- GBP +0.21%
- CHF -0.14%
- CAD -0.02%
- AUD-0.20%
- NZD +0.12%
New York Fed President John Williams signaled support for further rate cuts this year, while stressing that the U.S. economy is not on the verge of a recession. He noted that slowing job growth and businesses’ reluctance to hire require attention, but added that inflation remains contained, with underlying measures gradually moving toward the Fed’s 2% target. Williams acknowledged that tariffs have raised the price of imported goods, though he does not see second-round effects that would amplify inflation pressures. He argued that rates should move back toward a neutral setting, emphasizing that the Fed’s focus must remain on its mandate despite political pressures.
Fed related, according to the FT, U.S. Treasury Secretary Bessent, along with Treasury official Hunter McMaster and adviser Francis Browne, conducted extensive interviews with 11 candidates for the role of Fed chair over the past several weeks, wrapping up earlier this week. Each session reportedly lasted up to two hours, with Bessent pressing candidates on their positions regarding interest rates, as well as their responses to his own recent critiques of quantitative easing and calls for Fed reform. Candidates were also questioned on governance issues, including how they would address concerns that the Fed has gone beyond its mandate, raising the issue of so-called “mission creep.”
Bank of England policymaker Catherine Mann reiterated her hawkish stance, stressing that maintaining restrictive policy for longer is necessary to combat the UK’s stubbornly persistent inflation. She argued that monetary policy must stay tight to prevent expectations from drifting higher and to eventually create an environment more supportive of growth. Mann highlighted that the UK’s consumption gap stands out compared with international peers, and evidence from consumer behavior shows inflation expectations have not yet fully anchored. While her remarks largely repeat earlier positions, they reinforce her reputation as the BoE’s most hawkish member, favoring steady rates until inflation pressures are firmly under control.
Etsuro Honda, economic adviser to Japan’s proposed new PM Sanae Takaichi, cautioned the Bank of Japan against moving too quickly on interest rate hikes, saying the timing of the next increase remains uncertain. He argued that inflation expectations are still subdued, making it unlikely for USDJPY to surge above 155, while also noting that a weaker yen can support the economy during its recovery phase. Honda reiterated his view from earlier in the week that October would be “too early” for another hike, signaling preference for patience. While the yen’s recent sharp decline complicates matters, his remarks suggest officials are sending a signal to markets that they are closely watching the 155 level as a key threshold.
President Trump announced that both Israel and Hamas have agreed to the first phase of his peace plan. He said the deal will result in the release of all hostages and an Israeli troop withdrawal to an agreed line, marking the initial steps toward a “strong, durable, and everlasting peace.” Trump emphasized that all parties will be treated fairly and described the agreement as a historic and unprecedented achievement. He also thanked Qatar, Egypt, and Turkey for their mediation efforts, framing the development as a great day for the Arab and Muslim world, Israel, surrounding nations, and the United States. PS the Nobel Peace Prize will be announced on Friday.
The US stocks in pre-market trading are little changed and above and below unchanged in early premarket US trading:
- Dow Industrial Average is up 42 points
- S&P index is up 1.0 points
- Nasdaq index is -18 points
IN the US debt market, yields are little changed. The 3rd coupon auction (and last for the week), will take place at 1 PM where the U.S. Treasury auctions off 30-year loans. The 3-year note auction on Tuesday was met with strong demand, the 10-year auction was more average demand. A snapshot of the market shows:
- 2-year yield 3.588%: +0.5 basis points
- 5-year yield 3.722%, unchanged
- 10-year yield 4.124%, -0.6 basis points
- 30-year yield 4.710%, -1.4 basis points
In other markets:
- Crude oil is trading down $0.30 at $62.25
- Spot Gold is trading up $2.77 at $4,043. Yesterday the high price rose to a new all-time record of $4059.31.
- Spot Silver is trading up $0.86 at $49.73 in just off session highs at $49.74. I have the all-time high price from 2011 at $49.83.
- Bitcoin is trading down $250 at 123,099. 6
