Markets:
- Gold up $13 to $2662
- US 10-year yields flat at 4.68%
- WTI crude down 93-cents to $73.32
- S&P 500 up 0.2%
- USD leads, GBP lags
The US dollar finished as the top performer once again today. In the bigger picture, the market is getting increasingly anxious about Trump taking office and placing tariffs. With the whole world as a target, the only safe place is the US dollar. The rhetoric isn’t going to get any quieter, including after Trump takes office.
The pound was the big loser on the day but the selling all took place before US hours. The catalyst was a blowout in gilt yields to the highest since 2008. Stops were hit below 1.2450 as the pound fell to the lowest since April. There was a slight recovery in North American trading as the US dollar drifted modestly lower across the board.
Economic data was mixed with the ADP number a negative for employment while jobless claims dropped. The Fed Minutes were largely ignored but Waller offered up comments that were more dovish than expected, highlighting that he believes rate cuts will continue. That runs counter to the global bond market, which is either pricing in higher inflation, higher US deficits or some kind of trade uncertainty.
In general, the FX moves in US trading were small as the dollar drifted slightly lower. Stocks and commodities were volatile though and bitcoin dipped sharply at one point before recovering. Eyes are increasingly fixed on fixed income but the 30-year sale with a 0.7 bps stop through today provided some relief.
Reminder that Thursday is something of a holiday for US market’s due to Jimmy Carter’s funeral and Friday is non-farm payrolls.