From Marc to Market:
The US dollar is consolidating yesterday’s gains today. An off-ramp to the Middle East conflict seems increasingly elusive. After surging more than 9% yesterday, the front month WTI and Brent oil futures contracts are up 3.6%-4.6% today. There are three developments in the US that will be closely monitored today. First, the June CPI is due. It looks to have moderated a little, but given Governor Waller’s comment yesterday, a sticky core rate could boost the perceived chances of a hike later this month. Second, Chair Warsh testifies before the House Financial Services Committee (10:00 AM ET). Third, the US earnings season gets underway with several large bank reporting today.
Japanese government bonds have rallied today despite continued rally in oil prices and a soft yen. Last week, Finance Minister Katayama suggested that Japanese pension funds boost their domestic allocation. Today, she advocated adding government bonds to the individual tax-free investment vehicles. Meanwhile, the dollar is holding above JPY162.00. Lastly, China reported a larger than expected, $125.6 bln June trade surplus, which will likely increase the tension with the US and Europe....
....MUCH MORE
