Markets:
- S&P 500 down 44 factors to 3975
- US 10-year yields up 6.6 bps to three.95%
- WTI crude oil up $1.19 to $76.58
- Gold down $11 to $1811
- USD leads, JPY lags
Friday’s PCE inflation report definitely did not cool worries about rising costs as all the primary numbers within the report except for earnings ran sizzling. The market response was extra of what we have been seeing currently — US greenback energy.
The info helped the greenback break by some resistance ranges because it climbed to the highs of the 12 months on most fronts (with GBP as a notable exception). AUD/USD broke by the 200-day shifting common and fell to 0.6726, closing close to the lows of the day and on the worst ranges since early January.
USD/JPY continued to run and has now almost stuffed within the December hole from the BOJ shock. What’s fascinating is that regardless of the rout in shares, the yen was the worst performer as we speak. That is a sign the market is pricing in higher international development and better charges in all places. That is a theme to look at within the week forward because the calendar turns.
EUR/USD fell for the fourth consecutive day and is approaching the early-January low of 1.0479. The greenback is getting a broad raise from chatter about greater Fed charges. The derivatives market hinted at 5.41%, which is an honest likelihood of 5.50-5.75% this 12 months whereas US 2s hit 4.81%, which is the very best shut since 2007 and an attractive risk-free parking spot for 2 years.
It wasn’t an entire whitewash for the greenback although, as USD/CAD fell 60 pips from the highs as oil costs climbed to complete the week unchanged. We’re on the level the place commodities and different growth-sensitive belongings should decide about whether or not to cheer a greater near-term outlook or cower on the considered greater central financial institution charges and a doubtlessly recession in 2024.
Have an exquisite weekend.
