Fed’s Waller:Time to cut rates is getting closer based on analysis of potential scenariosBeige Book: Economic activity maintained a slight to modest paceUS June housing starts 1.353M vs 1.300M expectedUS June industrial production +0.6% vs +0.3% expectedAtlanta Fed GDPNow growth estimate for Q2 comes in at 2.7% up from 2.5% priorEIA weekly crude oil inventories -4.870M draw versus expectations of a draw of -0.033MFed’s Barkin: Remarkable how strong consumer spending has remainedMore from Richmond Fed Pres Barkin: Fed will debate whether inflation is still “elevated”Fed’s Williams says rate cut could be warranted in the coming monthsMoe from Fed’s Waller: Exact timing of rate cut doesn’t matter a lotDemocratic representative Adam Schiff calls on Biden to step downUS treasury auctions off $13 billion of 20 year bonds at a high yield of 4.466%Teranet-National Bank Canada June house price index 0.0% vs +0.2% m/m prior
Markets:
Gold down $11 to $2457 after hitting record $2483US 10-year yields down 1.5 bps to 4.15%WTI crude oil up $2.12 to $82.88S&P 500 down 1.4%, Nasdaq down 2.8%JPY leads, CAD and AUD lag
Turmoil expanded in markets on Wednesday as US politicians aimed at chip companies. Biden said he may tighten controls on chips getting to China while Trump said that Taiwan needs to pay for defense. The result was a 12% decline in ASML, 9% in Qualcom, 8% in Broadcom and 6.6% in Nvidia as it fell to the lowest close since June 4.
The turmoil in stock markets didn’t exactly flow through into broader markets. Treasuries initially sold off then rallied slightly while the US dollar didn’t provide any safe haven value.
Some of that was due to a big jump in the yen that kicked off in European trade. The pair fell 200 pips and tested 156.00 several times but has so far been unable to break. It could be a fresh round of intervention or could reflect broader deleveraging and position squaring in a market that’s been hit by heavy rotation.
Economic data wasn’t overly notable but Fed officials continued to open the door towards a September rate hike, with the usually-hawkish Waller noting that the time to cut is getting closer, depending on how data unfolds.
This article was written by Adam Button at www.forexlive.com.
