From Marc Chandler at Bannockburn Global Forex:
Overview: The markets' evolving expectations of a more aggressive monetary policy is not limited to the Federal Reserve, where the terminal rate is now straddling the 4% area, around 100 bp above late May levels. Consider that on May 31, the swaps market saw the key rate in the eurozone finishing the year at 60 bp. It has risen by more than 40 bp in the past four sessions. The UK expectedly reported the second consecutive monthly contraction in GDP, and still there was an 11 bp rise in the expected year-end rate to bring the five-day surge to more than 50 bp. This has seen equities plummet. The S&P 500 and NASDAQ gapped lower to new lows for the year. It was the second consecutive gap and lower opening, but there does not look to be a third. Equities were still heavy in the Asia Pacific region. Of the large markets, only China rose. Australia’s benchmark wilted by 3.5% to lead the drop. Europe’s Stoxx 600 is off around 0.5% near midday, falling for the sixth session. US futures, though, are pointing to a modestly higher open. The US Treasury market is better bid today and the 10-year yield is off five basis points to 3.30%. European yields are mostly 1-2 bp higher, though the yield on the 10-year Gilt comes off a little more than five basis points. The US and UK two-year yields are off 8-9 bp. The dollar is mixed. The euro, Swiss franc, and Japanese yen have advanced, while the dollar-bloc, sterling, and Norway are weaker. Among emerging markets, most currencies are firmer but a handful of East Asian currencies and the Mexican peso.
Gold extended its sell-off to $1810 today after a big outside down day yesterday that peaked above $1878. It has steadied around $1823 now. July WTI is firm, holding above $120 and trading near $122. US natgas is up about 0.75% today after falling by about 4% over the past two sessions. Europe’s natgas benchmark is up 4.4% after a 1.4% gain yesterday. The new Covid restrictions in China continue to weigh on iron ore prices. They fell 1.1%, the fourth consecutive decline after a 3.65% drop yesterday. July copper is also off for the fourth session. July wheat is trading near the lows for the month, slipping 1.4% today after a steady session yesterday....
....MUCH MORE
