Following this morning’s PMI report, a reading of 58.4, over 2 points higher than the previous reading of 56 and the top of the Econoday consensus ranges for both Manufacturing, 57 versus 54.7 and Services, 58.7 versus 56.5, markets are in a risk off & wait and see mode as the yield on the 10 year has traded back above 5%. As of this writing, the following markets:
- Financials/interest rates such as 30 day fed funds, 3 month SOFR, notes and bonds
- Metals such as gold, silver, platinum, palladium, copper and aluminum
- Currencies major crosses against the dollar such as Euro/EUR, Yen/JPY, Pound/GBP, CAD, AUD, and CHF
Are all trading at or near the lows of the day amid a stronger dollar and the market pricing in higher rates per the Fed’s inflation mandate, while many note the potential for a policy error as the interest rate hikes and increased cost of capital do not mitigate supply shocks to geopolitical tensions between the US/Iran and Saudi/Houthis as well as Russia Ukraine.
Along with the US Dollar, Crude Oil WTI and Brent are stronger today trading closer to their fresh highs of the day following US and Iran speeches and meetings this morning and yesterday at the UN.
Markets are also anticipating any developments that arise from the Trump XI summit which will begin today, especially grains.
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Direct: 312-957-8248
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