From Marc to Market:
Overview: The US dollar is narrowly mixed as North American participants prepare to return for the last session of the first half. Despite firmer than expected Tokyo CPI and stronger than expected industrial output, the market lifted the greenback around JPY161.25 before profit-taking pressures bought it back toward session lows near JPY160.65 in Europe. President Biden is thought to have lost last night's debate with Trump, but it does not appear to be much of a market factor. The immediate focus is on today's PCE deflator, which we suggest below may not have lasting impact as the signal has already been given from the CPI and PPI, and there will be another batch of inflation readings before the Fed meets again. The outcome of Sunday's French election remains a source of investor anxiety and the French 10-year premium over Germany has widened further today to the most since 2012. Most emerging market currencies enjoy a firmer tone against the dollar today, including the Chinese yuan. The PBOC fixed the dollar lower today for the first time in eight sessions.
Equities are closing the month on a firm note. The large bourses, but India rose in the Asia Pacific region. Japan's Topix reached a new 34-year high. Europe's Stoxx 600 is trying to snap a three-day decline and is up about 0.25%. US index futures are trading higher. Benchmark 10-year yields are 1-4 bp higher in Europe and the 10-year US Treasury yield is up a couple of basis points to 4.30%. The yield is up about seven basis points this week. Gold is consolidating yesterday's recover and is slightly firmer near $2330, where is up fractionally on the week. August WTI is breaking out of its $80-$82 consolidation and reached almost $82.75 today, a new two month high.......America
It may sound blasphemous, but don't expect much more than a knee-jerk reaction of the release of the inflation measure the Fed targets, the PCE deflator. First, the signal has already been generated from the CPI and PPI releases. With those inputs, the PCE deflator rarely surprises. Second...
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