"Bounce Back Ability" was a term used by a South London football team but could equally be used by financial commentators. As I type, the Nikkei is up 9%, pointing towards yesterday's move as a "summer correction" rather than anything more long-term and sinister. There has been talk of an intra-meeting rate cut that could provide some support for these markets, but order returned with the RBA, Australia’s central bank holding its cash rate at 4.35% for a sixth straight meeting overnight. It now appears that US politics is set to be a big USD driver. If polls continue to suggest that Trump could take back the White House in the November election, the inflationary implications of his tariffs policy suggest additional support for the USD, and these dips are worth buying.
In other markets, copper dropped 3.5%, zinc 3%, and tin 4% yesterday. Yet again, stability appears to have returned with West Texas Intermediate crude rising 1.6% to $74.14 a barrel, gold at $2,400, Bitcoin rising 1.8% to $55,395.78, and Ether rising 2.2% to $2,490.44. Yields bounced as well: 10-year Treasuries advanced six basis points to 3.85%, and Japan’s 10-year yield advanced 18 basis points to 0.925%. Currency-wise, USDJPY opens at 146, GBPUSD at 1.2760, and EURUSD at 1.0950.
Data-wise, it is Eurozone retail sales at 10 am, and domestically, Keir Starmer is criticizing Elon Musk, who posted on X that "civil war is inevitable" under a video of violent riots in Liverpool.
Have a good day, and may Team GB's gold rush continue...
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