- Fed’s Hammack: Now is the time to bring more restraint into policy
- Trump says he is demanding compensation from Iran for people killed
- It’s time to start the countdown on Atlantic hurricane season
- US July employment trends 107.71 vs 106.74 prior
- Intel dilutes shareholders: Will launch $15 billion secondary
Markets:
- WTI crude up $3.90 to $82.08
- Gold up $46 to $4388
- S&P 500 down 0.1%
- US 10-year yields up 4.3 bps to 4.70%
- GBP leads, JPY lags
The yen was beaten up on Monday as it gave back a big part of its intervention gains. USD/JPY rose more than 150 pips on the day on steady bids that continued as the pair broke through 159.00 in US trading. That’s a real challenge to Japan’s finance ministry and the US Treasury as they try to clamp down on the pair, with limited success so far despite a big spend. Eyes will be on the rhetoric as Japan wakes up.
Otherwise, the market is taking a dim view of the chance of peace in Iran and a reopening of the Strait of Hormuz. Trump sounded on the weekend like he had abandoned the military option and was going to try to starve out Iran with a blockade. In turn, Iran is going to try to keep oil blocked in the Strait and drive up the price of crude. With oil up nearly 5% today, the costs are quickly going to mount on both sides. Trump turned to compensation rhetoric this time rather than ‘bomb the power plants’ so this could last awhile.
Gold was also interesting as it gained once again in a reversal. It had been as low as $4313 but is trading near the highs at $4389 now in a nice turnaround. The US intervening to weaken its own currency, Friday’s soft jobs report and a meandering war are all tailwinds and the price action is impressive.
On the equity side, there was an earlier report of a $500 billion structured finance loan for Nvidia in the hyper-scaler buildout in what’s possibly the largest private fundraise of all time. The details are beginning to leak out now but the initial reports weighed on Nvidia.
This article was written by Adam Button at investinglive.com.