Indecisive Markets

Crypto selloff aside, markets are like these conversations that everyone has with their better half from time to time... 👇

What do you want for dinner?

Oh I don't know, what do you fancy?

Shall we get something in?

Yeah, what are you thinking?

Oh, I don't know, what is there?

It's tough when the biggest story is a sausage trade war

Member states, led by France, were said to have increased the pressure on Mr Sefcovic to force Britain to fulfil its commitments.

"The EU does not want to look like it is being made a fool of," one source said.

They don't need anyone to help them with that...

One thing that's keeping slim hopes of some volatility alive?

It goes against consensus...

@EddBolingbroke

FX Vols 👇

Nomura FX Implied Vols via @DoejiStar

The Fed's inflation is transitory, employment is more important messaging has been received loud and clear by the market...

And there are even suggestions that recent employment data means that the Fed will wait for longer before tapering QE...

BlackRock: “We advocate looking through near-term market volatility and remain pro-risk, predicated on our belief that the Fed faces a very high bar to change its easy monetary policy stance,”

Leading into FOMC, the odds surely favour the Fed not changing policy, updating economic projections a bit, and MAYBE tweaking the odd dot or two.

Post CPI, if they reiterate their supportive stance: long way from our goals although some progress has been made etc. how would the market respond to that?

Rather than being cautious about a Fed taper, are markets simply waiting for the green light to push risk assets higher again?

In the UK, a mixed bag of overnight news.

This is not unexpected (nor confirmed yet), and was reported as a possibility over ther weekend.

 🇬🇧 JPM | on GBP

🔹 "We still like sterling longs and feel even if the 21st June is pushed back it should ultimately have little impact on the economy given most of the UK is now open, although admittedly a rise in hospitalisations over the coming weeks would be a worry."— PiQ (@PriapusIQ) June 7, 2021 

The British Retail Consortium said total sales among its members, who include supermarkets and high-street chains, were 10.0% higher last month than in May two years ago.

Clothes, shoes and furniture saw especially strong gains in sales, the BRC said, benefiting from shoppers being able to view goods in person since non-essential retailers were allowed to reopen in April after months of closure.

Relaxed restrictions on socialising also encouraged shoppers to buy new summer clothes.

Payment processor Barclaycard, which sees almost half of credit and debit card transactions, said consumer spending was 7.6% higher than in May two years ago.

Pubs and restaurants were able to serve customers indoors from May 17, though only at reduced capacity.

Barclaycard said spending at restaurants last month was still 54% below its level two years ago, while spending at pubs and bars was 19% lower. But this was an improvement from April when sales were down 74% and 67% respectively.

Foreign travel remains highly restricted. Spending with airlines was 74% lower than in May 2019, little better than April.

Looking ahead...

Germany's ZEW is the highlight, but it's unlikely to move the needle substantially ahead of the ECB meeting on Thursday.

  • EUR/USD: 1.2065-70 (440M), 1.2175-85 (825M), 1.2200 (1BLN), 1.2225-35 (620M), 1.2250-65 (882M), 1.2300 (1.1BLN)

  • USD/CHF: 0.8880 (390M), 0.9075-95 (380M)

  • AUD/USD: 0.7700-10 (811M), 0.7725 (400M), 0.7745-50 (911M)

  • NZD/USD: 0.7150 (450M), 0.7260 (1.2BLN)

  • USD/JPY: 108.45-65 (1.7BLN), 109.00-05 (855M), 109.50 (1BLN)

Source: DTCC