From Marc Chandler at Bannockburn Global Forex:
Overview: The market feels a bit more at ease after the first round of the French elections that extreme policies will be avoided by an effort to deny the National Rally a legislative majority. French stocks have recouped some of their recent losses and the euro reached $1.0775, its best level since June 13. The yen remains soft after the Tankan survey showed little change but an uptick in capex plans. Outside of the yen and Swiss franc, the dollar is trading with a mostly softer bias. A handful of emerging market currencies are weaker today, including the Mexican peso. Central European currencies, though, a firmer in the wake of the euro's gains, but the South African rand is leading the emerging market currencies with nearly a 1% gain as a new government is falling into place.
Asia Pacific and European equities began the new month on a positive note. All the large bourses in the Asia Pacific region were higher but Australia after MSCI's regional index posted its first weekly advance since early June last week. Europe's Stoxx 600 is snapped its own four-day down draft today, helped by the bounce in French stocks. US index futures are narrowly mixed. Bonds are continuing their pre-weekend slide European yields are 2-8 bp higher, with core-peripheral spreads narrowing and the French premium over Germany narrowing by around five basis points. The 10-year US Treasury yield is firm near 4.41% after rising 14 bp last week. Gold is trading quietly (~$2318-$2330) after settling last month slightly below $2327.August WTI continues to probe the $82 area. It reached $82.70 before the weekend but closed near $81.40...Europe
The first round of the French elections gave Le Pen's National Rally a plurality of votes but even with a generous look at round two, it most likely will not secure an outright majority after the second round this coming weekend. The markets have responded well. French stocks have rallied around 1.4% and the French 10-year premium over Germany has narrowed by about five basis points. Meanwhile, tomorrow the preliminary aggregate June CPI will be reported, and the year-over-year rate is likely to be little changed from May's 2.6%, but for the rounding. Before the weekend, France, Italy, and Spain reported their figures and today, German states have. The national figure is due shortly and it looks to have risen a mild 0.1% for a 2.4% year-over-year pace (down from 2.5%). Eurozone consumer prices appear to have accelerated in Q2 (4.3-4.4% annualized vs. 4.0% in Q1). Looking further ahead, the base effect warns of a difficult second half....
....MUCH MORE
