From Marc to Market:
Overview: There were three highlights for today and two, the rate cut by the Reserve Bank of Australia and theUK's labor market update are behind us. The Reserve Bank of Australia delivered a dovish cut after last month's hawkish hold. It signaled scope for two more rate cuts. The UK's labor market appeared to stabilize, and this has seen the odds of another cut before the end of the pared. The third highlight is the US July CPI. We had anticipated a firmer today for the dollar ahead of the report and this has transpired. Even though headline and core CPI are likely to have edged up, we do not think that stands in the way of a cut next month. The full employment side of the Fed's mandate is seen at risk and a consensus appears to have formed to remove more of the restrictiveness of the current monetary setting. Ahead report, the dollar is trading quietly but with a mostly firmer bias.
Japanese markets re-opened after yesterday's holiday and stocks rallied, with the Nikkei gaining a little more than 2%. Most of the large bourses in the region rose with the exception of South Korea, India, and Singapore. Europe's Stoxx 600 is recouping yesterday's minor loss. US index futures are slightly firmer. Major bond markets are mixed. The 10-year JGB yield edged up to almost 1.49%. Benchmark 10-year yields are mostly narrowly mixed in Europe, leaving the 3.5 bp increase in the UK 10-year Gilt the outlier. The 10-year US Treasury yield, which has risen for the past five sessions, is around a basis point softer, near 4.28%. Gold, which was tagged for 1.6% yesterday, the most in nearly three months, has stabilized today, but is stuck near yesterday's trough (~$3341.50). After falling 5.1% last week, September WTI posted its first gain of the month yesterday, rising a few cents. It is up a few more cents today but remains in the pre-weekend range (~$62.75-$64.60)....
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