Market News

A soft jobs print would reinforce the Reserve Bank of Australia's view that the labour market is gradually cooling, supporting the case for a pause or a slower pace of further rate hikes and likely weighing on the Australian dollar. A stronger-than-expected outcome, closer to Westpac's forecast, would complicate that narrative and could see markets price in a higher chance of further tightening. CBA's view that unemployment climbs toward a 4.7% peak by late 2027 points to a multi-year softening path rather than an abrupt shift, meaning today's single data point carries less weight for the RBA's rate trajectory than the underlying trend across coming months. Traders will likely focus most closely on the participation rate as a cleaner read…

Australian jobs data and People's Bank of China rate setting are due today. 

I'll have a preview of the jobs data posted separately soon. 

As for the PBoC, they might surprise us today:

• Analysts say that a surprise China LPR cut cannot be ruled out this week

• FOMC Minutes: Many participants assessed higher rates would likely be necessary if inflation did not fall
• US Treasury auctions off $18 billion of 20-year bonds at a high yield of 5.204%
• Trump tells reporters US and Canada reached a deal, suggests Iran negotiations continue
• Precious metals surge after surprise US Treasury announcement to support longer-dated securities
• EIA weekly US crude oil inventories +4.405M vs +0.200M expected
• Canadian dollar rises to new highs after Trump's tariff TACO, US Treasury announcement
• US Treasury is increasing the size of liquidity support buyback operations for longer-dated securities
• RBI minutes show different inflation concerns and a case for a rate hike

If it wasn't for a surprise US Treasury announcement, it…

• Most participants supported keeping interest rates unchanged, but several favoured an increase
• Many participants assessed higher rates would likely be necessary if inflation did not fall
• Some participants said financial conditions might not be restrictive enough to return inflation to 2% target
• Various participants said tighter financial conditions over inter-meeting period reflected strong economic growth and expectations for the Fed to adopt more restrictive stance before long
• A few participants who favoured raising rates at the meeting judged doing so would likely help forestall need for further hikes
• Chairman Warsh said six scheduled meetings per year, held roughly every two months, would allow more information to accumulate between…

• High yield: 5.204%
• WI level at the time of the auction 5.199%
• Tail 0.5 bps
• Bid-to-cover ratio 2.53X
• Direct (domestic buyers) 24.59% 
• Indirect (international buyers) 62.93%
• Dealers 12.49%

The US Treasury sold $18 billion of 20-year bonds at a high yield of 5.204%, with the auction showing a somewhat soft demand profile despite today's earlier announcement that Treasury would at least double the size of its long-end liquidity-support buybacks.

The auction tailed by 0.5bp, with the high yield coming in at 5.204% versus a 5.199% when-issued yield immediately before the auction. A tail generally indicates that investors demanded a slightly higher yield than the market had anticipated, making this a modestly weak result. The bid-to-cover ratio came…

Trump spoke to reporters at the White House about the tariff deal with Canada, and added a couple of comments on Iran. On Canada, Trump said “we’ve come to a deal” following what he described as a good conversation with Canada's Prime Minister Carney.

He reiterated, however, that the agreement remains subject to finalisation, meaning the deal is not yet fully locked in. The comments follow the three-day pause on the planned 50% tariffs.

Trump's comments are supportive for the Canadian dollar, although much of the breakthrough has already been priced in and the loonie is just benefiting from US dollar weakness. 

Trump also commented on the situation around the Strait of Hormuz, saying that a large number of vessels had passed through the…

The US Treasury announced today that it will at least double the size of its liquidity-support buyback operations for longer-dated Treasury securities, increasing the maximum purchase from $2 billion to at least $4 billion per operation. The change will apply beginning September 9, 2026.

The announcement came at a time when long-dated Treasury yields have been under heavy upward pressure. The US 30-year bond yield, for example, recently rose to the highest level since 2007 and it attracted lots of market attention. The bond market has been tightening financial conditions and this move from the US Treasury kind of works in reverse.

The reaction in the markets was an easing in financial conditions. In the big picture, this could be a…

• Prior was +17.423M
• Gasoline +0.688M vs -1.504M expected
• Prior was -0.968M
• Distillates -1.530M vs -0.982M expected
• Prior was -0.010M

While the increase was significantly smaller than the previous week's massive 17.423 million-barrel build, it still points to continued accumulation of crude stocks and a relatively loose US supply-demand balance.

The product data was also weaker than expected. Gasoline inventories increased by 688,000 barrels, compared with expectations for a 1.504 million-barrel draw, while distillate stocks fell by 1.530 million barrels, only modestly larger than the expected 982,000-barrel draw.

One of the most notable data was the collapse in US imports of Saudi crude, which fell by 91%. The US has increasingly relied on…

The Canadian dollar had a rough session yesterday as the tariff deadline approached with no breakthrough in US-Canada negotiations, leaving markets increasingly concerned that the threatened 50% tariffs would go ahead.

The picture changed completely after President Trump delivered another classic TACO moment by pausing the tariffs for three days. Trump added that the US and Canada have a deal, subject to the finalisation of the relevant documents. The news provided significant relief for the Canadian dollar, which erased all of its losses heading into the tariff deadline.

Today, the loonie extended the gains versus the greenback today after the US Treasury announced that it would increase the size of its liquidity-support buyback operations…

• US Treasury Statement

The U.S. Treasury announced today that it will at least double the size of its liquidity-support buyback operations for longer-dated Treasury securities, increasing the maximum purchase from $2 billion to at least $4 billion per operation. The change will apply beginning September 9, 2026.

The announcement comes at a time when long-dated Treasury yields have been under heavy upward pressure, with investors demanding higher compensation for fiscal, inflation and supply risks. The Treasury's move provides additional demand precisely in the part of the curve facing the greatest pressure.

As a reminder, the US 30-year bond yield recently rose to the highest level since 2007 and it attracted lots of market attention. The…

• RBI Meeting Minutes

The Reserve Bank of India’s Monetary Policy Committee unanimously voted to keep the policy repo rate unchanged at 5.25% at its August 3–5, 2026 meeting, while retaining a neutral stance. Despite the unanimous decision, the minutes show differences in how members assess the inflation risks ahead.

The common view is that India’s economy remains resilient despite geopolitical tensions, volatile oil prices, trade uncertainty and monsoon risks. Strong domestic demand, credit growth, investment and exports supported the decision to raise the 2026-27 GDP growth forecast to 6.7%.

At the same time, inflation has risen to 4.4%, but most members agreed that the increase remains largely supply-driven, particularly through food and…

Headlines:

• UK headline inflation picks up in July, core prices hold steady
• Euro area inflation confirmed to nudge up a little in July
• FOMC meeting minutes in focus in the day ahead
• ECB policymaker Rehn says no clear signs of second-round effects just yet
• Bitcoin Price Analysis: The Critical Crypto Chart Between $64K and $65K

Markets:

• WTI crude oil +0.8% to $85.60
• Gold +0.8% to $4,369
• JPY leads, AUD lags on the day
• European equities little changed; S&P 500 futures flat
• US 10-year yields down 1 bps to 4.696%
• Bitcoin down 0.1% to $64,459

It was a quieter session as markets continue to move along, still awaiting on how things will play out in the Middle East.

US-Iran tensions continue to linger and that's keeping the broader market mood and outlook on…