From Marc Chandler at Bannockburn Global Forex:
Overview: The year-end effective Fed funds rate implied in the futures market is about 5.11%. The rate has been averaging 5.08% since the Fed hiked rates last month The Fed may go to pains to explain that the steady that to be announced later today is just a pause to get a better read on the economy, the market favors this to be the end of the tightening cycle. The dollar is trading softer against nearly all the G10 currencies. Emerging market currencies are more mixed, but JP Morgan Emerging Market Currency Index has steadied after slipping lower in the past two sessions. Gold is recovering after yesterday's outside down day and settlement below $1950.
Outside of China, Hong Kong, and South Korea, most large Asia Pacific markets advanced, led by more than a 1% gain in Tokyo. Europe's Stoxx 600 is advancing for the third consecutive session, which if sustained will be the longest rally in two months. US index futures are trading with a firmer bias. After jumping nearly eight basis points yesterday, the US 10-year yield is a little softer today to about 3.80%. The US two-year yield rose by nearly nine basis points yesterday and is also a touch softer today near 4.65%. European 10-year benchmark yields are slightly firmer today, but UK Gilts which have been sold aggressively in recent days, have steadied with the yield near 4.40%. July WTI has edged back above $70 a barrel, helped by new quotas in China. This blunted the concerns about demand, which had helped press the contract to $66.80 on Monday. The International Energy Agency sees a sharp slowing in world demand growth next year, with falling inventories. In its first detailed look at next year, it sees a tight market, especially in H2 24.
Asia Pacific
The PBOC will set the one-year medium-term lending facility rate first thing tomorrow. It got large banks to cut their deposit rates and it cut the 7-day repo rate yesterday by 10 bp. If it does not deliver a small cut in the MLF rate (now 2.75%) tomorrow, it will disappoint and confuse the market....
....MUCH MORE
