From Marc to Market:
Overview: The dollar is on fire. Ahead of today's US November CPI and tomorrow's anticipated rate cuts by the European Central Bank and the Swiss National Bank, the greenback is rising against all G10 currencies and nearly all emerging market currencies (but the Hong Kong dollar and the Indian rupee, which slipped to a record-low earlier today). There is a press report claiming that Beijing is considering allowing the yuan to fall further but it is not clear what this means in a strong US dollar environment. China's 10-year yield is uncharted waters near 1.80% and additional monetary easing is expected. The yuan is off 2.3% this year against the dollar, making it among the strongest currencies in the world. Ahead of today's CPI, the futures market has about an 85% chance of a Fed cut next week and has 100 bp of cut discounted between now and the end next year, which is about a quarter-point less than the median Fed dot in September.
Equities were mixed in the Asia Pacific area after US indices fell yesterday. Europe's Stoxx 600 snapped an eight-day advance yesterday and is flat now, seemingly waiting for US leadership. US index futures are slightly firmer. European 10-year yields are mostly softer, and Italian, Spanish, and Greek benchmark yields are at three-month lows. The 10-year US Treasury yield is firm near 4.23%. It has risen the past two sessions after finishing last week near 4.15%. Gold met some sellers when it poked above $2700 for the first time in around two-and-half weeks. It pulled back to about $2675 and approached the high again in the European morning before consolidating. Reports suggesting that the Biden administration is considering new sanctions on Russian oil may be lifting January WTI today. It approached $67 a barrel Monday and is near $69.20 now....
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