- Gold up $27 to $1654
- US 10-year yields down 1 bps to 4.22%
- WTI crude oil up 48-cents to $84.99
- S&P 500 up 88 factors to 3754
- JPY and AUD lead, USD lags
This week had all of it and a superb portion of it unwound right this moment. We seemed like we have been going to get the thirteenth straight day of USD/JPY positive factors after the BOJ signaled no change in coverage by increasing bond purchases. That kicked off a spike to 151.94 however the flip got here when the Fed appeared to plant a WSJ story downplaying the chances of one other 75 bps hike in December.
There was a blip in USD/JPY on the similar time that may have been the beginning of Japanese intervention. It additionally kicked off a restoration in equities and cap in yields, particularly on the brief finish.
What had been a trickle was a flood with some surprisingly dovish indicators from some-time Powell mouthpiece Mary Daly, who’s the President of the SF Fed. She indicated that 4.50-5.00% continues to be the Fed prime, regardless of the market making an attempt to cost in one other hike. Across the similar time, the MOF got here in with the hammer, intervening in USD/JPY and sending the pair decrease by greater than 400 pips.
The mixture of dovish indicators and FX intervention kicked off a rout on the US greenback with the pound reversing heavy losses regardless of the political turmoil. The euro and commodity currencies additionally staged massive reversals.
Might Fed funds now value 4.87%, down from 5.03% on Wednesday and the entrance finish of the Treasury curve rallied alongside a formidable day for equities. It is clearly a market that simply desires a little bit of certainty from the Fed earlier than placing some cash to work.
The weekly positive factors in shares have been the most important since late June with the S&P 500 up 4.7% with half of that right this moment.
Have a beautiful and restful weekend as a result of subsequent week kicks off a wild run of central financial institution choices.