EUR Up, JPY Down in quiet FX Trading; US PPI, retail sales


Rates as of 0500 GMT

Market Recap

A generally riskon day in financial markets as global stock markets moved further into record territory while bond markets generally sold off ahead of tomorrows meeting of the ratesetting Federal Open Market Committee FOMC.

The SP 500, Europes STOXX 600 and the MSCI World index all hit record highs. In contrast, sovereign bond prices fell yields rose in both Europe and the US on nervousness that perhaps the Fed might decide to accelerate their timetable for tapering down their bond purchases. Tenyear Treasury yields rose 4.2 bps, their biggest daily rise in over a month and a sharp contrast to the decline in yields weve seen over the last month. Implied fed funds rates for end2023 rose by about 1.5 bps.

As usual, its hard to weave a cohesive story around FX moves of 0.1, which I consider to be the financial markets equivalent of Brownian motion. Or maybe in finance I should be comparing it to a Wiener process, if only I could understand what that is.

Theres no particular reason why EUR shouldve been at the top of the list. Eurozone bond yields rose, but not as much as US yields did.

I was surprised by the resilience in the pound after PM Johnson announced a fourweek delay to reopening the economy. The new date is July 19th, not June 21st as originally scheduled. The delay does not come with any additional financial aid to companies, which will have to start kicking in 10 of the cost of furloughed employees plus start paying some…


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