Market News

It is that time of the month again.

We're getting the first signals on how month-end flows might shape up trading conditions next week, with BofA’s latest rebalancing model pointing to JPY and GBP outflows against EUR inflows into the September fix.

As a quick refresher, BofA estimates these flows by using a conventional 60/40 global equity and bond portfolio. The idea is that relative moves across asset markets during the month can leave international portfolios needing to rebalance their currency exposure when we get to month-end.

And this time around, the call isn't a straightforward one tied to the dollar.

On the euro, BofA says the expected rebalancing flows are running against its other short-term signals - suggesting that the currency…

USD/JPY is extending its drop today, now down around 0.6% to 157.90 as Japan prime minister Takaichi adds more colour to her summit meeting with US president Trump.

Takaichi says Trump had told her that a weaker yen is putting pressure on US trade. And that adds to the concerns flagged by Japan finance minister Katayama earlier in the day. Katayama had previously revealed that Trump raised the issue of yen weakness during the meeting, with Tokyo also reaffirming close coordination with Washington on currency matters.

Besides that, Takaichi also says there was no discussion on financial or fiscal policy between the two leaders.

That's important to note as it doesn't necessarily hint that Washington is leaning on Tokyo over the BOJ or the…

Stocks Resilient as Yields Drive Higher – Dow down 0.3%

US equity markets remained relatively resilient in trading yesterday despite another significant move higher in Treasury yields, as investors continued to assess the outlook for US monetary policy and developments in the Middle East. The Dow Jones declined 0.31% to close at 51,349, while the S&P 500 slipped just 0.02% to 7,704. The Nasdaq finished effectively unchanged, edging 0.01% higher to 26,939.

US Treasury yields continued to rise across the curve following further comments from Federal Reserve officials indicating that additional interest rate hikes may be required to bring inflation under control. The policy-sensitive 2-year yield increased 2.7 basis points to 4.924%,…

●         Asian Stock Markets : Nikkei up 1.14%, Shanghai Composite down 1.22% Hang Seng down 1.89% ASX down 0.56%

●        Commodities : Gold at $4,310.25 (0.29%) Silver at $64.222 (0.35%), Brent Oil at 105.60 (-0.96%), WTI Oil at 93.08 (-1.60%)

●        Rates : US 10-year yield at 5.191, UK 10-year yield at 5.3845, Germany 10-year yield at 3.6411

●        (CAD)    Retail Sales m/m  0.7% to 0.8%  expected

U.S. equity futures were little changed on Thursday evening as Treasury yields continued to rise, keeping pressure on stocks and borrowing costs.

S&P 500 futures slipped 0.1%, while Nasdaq-100 futures also fell 0.1%. Dow Jones Industrial Average futures declined 59…

FUNDAMENTAL OVERVIEW

We haven’t got major idiosyncratic catalysts for Ethereum this week, but we did have it on the macro side. The positive risk sentiment stemming from the sharp decline in oil prices prior to the UN General Assembly had been supporting the crypto market on easing inflation and rate hike concerns.

Unfortunately, Trump poured some cold water on expectations of an earlier end to the Iran war after he repeated that the US would make a deal with Tehran after the November elections. Oil prices, Treasury yields and the US dollar started to rise again after his remarks and weighed risk assets like cryptocurrencies.

The optimism returned yesterday, though,…

With each passing day, tokenisation is slowly becoming a bigger part of traditional finance. But as the change happens, Europe is starting to ask a much simpler question in relation to that. What money will actually be used once all of this moves on-chain?

Now, the ECB is already trying to build a bridge between blockchain, tokenisation and traditional finance through projects such as Pontes. On the surface, the idea isn't that complicated.

Just imagine a European government bond being traded on a blockchain instead of going through today's traditional financial plumbing. The bond can be tokenised. And that means the trade can settle faster, with potentially less paperwork and fewer middlemen involved.

But at the end of the day, someone…

USD/JPY is back under pressure today, falling towards the 158.00 level and putting yesterday’s technical break in danger of becoming a false one.

It's important to note here that the dollar backdrop has not suddenly turned bearish. Treasury yields remain elevated, with 10-year yields sitting at 5.17% after having touched a high of 5.22% overnight. The selloff in the bond market has accelerated this week amid a backdrop of stronger US economic data and poor bond auction demand. That just adds to the more hawkish Fed outlook in pushing markets further towards a higher-for-longer rates view.

In turn, that was what drove USD/JPY to push through key resistance from the 200-day moving average (blue line) and the descending trendline from July.…

FUNDAMENTAL OVERVIEW

Gold came back under pressure after Trump poured some cold water on expectations of an earlier end to the Iran war after he repeated that the US would make a deal with Tehran after the November elections. Oil prices, Treasury yields and the US dollar rose started to rise again after his remarks and weighed on gold.

The losses then extended on Wednesday after the US PMIs came out much stronger than expected, increasing Fed rate hike bets and sending real yields higher.

The markets are currently focused on renewed hopes for a deal and the reopening of the Strait of Hormuz following yesterday's news that Iran has put an offer on the table, promising to…

Last week, the US Senate held a procedural vote on the CLARITY Act, which unsurprisingly failed to pass, as Republicans hold 53 seats while 60 votes were needed, and Democrats weren’t exactly supportive of the bill or the crypto sector as a whole. Hence, the market initially dipped, but it didn’t last long since this was already priced in. For the same reason, crypto barely reacted to the Fed raising rates. 

Still, that doesn’t explain where the optimism came from, and there are a few theories.

The first is that part of the boost may have come from the US House Financial Services Committee's approval of a bill to create a strategic Bitcoin reserve. It can now go to a vote in the full House, and if it passes, it would still need to clear the…

• Spain Q2 final GDP +0.7% vs +0.7% q/q expected
• Prior +0.6%

The breakdownThe final estimate confirms that the Spanish economy grew by 0.7% in the second quarter, accelerating slightly from 0.6% growth in Q1.

Domestic demand remains the main engine of the economy, contributing 1.1% to quarterly GDP growth.

By aggregate demand, household consumption increased by 1.2% and government consumption by 0.5%. Meanwhile, gross fixed capital formation registered a variation of 1.7%.

External demand remains the weak spot, subtracting 0.5% from quarterly GDP growth as imports continued to outpace exports.

What does the data measure?GDP measures the total value of goods and services produced in Spain. The quarterly reading offers the clearest broad measure of…