From Marc Chandler at Bannockburn Global Forex:
There are two main developments today. The first is the escalation of the Middle East war has lifted oil prices. October WTI rose 9.7% last week, and with today’s gains, is a little more than 4% this week. This has helped lift bond yields. The second is the short squeeze of the Japanese yen. Since the middle of last week, the yen has surged about 4.7%. Although US Treasury Secretary Bessent appears to take credit for it, recall that initially after the intervention drove the dollar to JPY155, it had recovered to almost JPY160.40 last Wednesday. Many observers are concerned that the short yen positions funded the purchase of higher yielding or more volatile assets. However, it appears that some have shifted from yen funding to dollar funding, and we note that the Swiss franc may also replace the yen on the margins. The franc is near the year’s low against the euro.
Separately, the US trade conflict with Canada continues. The US has moved to block imports of some goods and has threatened to impose more tariffs on others. President Trump has threatened to bar Canadian companies from selling to US contractors. The import banks on some dairy products and alcohol will take effect in three weeks, while new tariffs will be in place in a week and these new tariffs will be stacked on top of the industry-specific levies that have already been implemented. Canada and the EU are expected to soon announce a comprehensive agreement. Canada appears prepared to do everything but join the EU itself. Next week Canada’s PM Carney will meet with EC President von de Leyen....
....MUCH MORE
