DXY is still falling. EUR was up and CNY down:
AUD was pounded against DMs as Westpac hikes rates:
It was mixed against EMs:
Gold is trying:
Oil too:
Base metals not so much:
Big miners were mixed:
EM stocks edged up:
But EM junk is still falling:
Treasuries were sold:
Bunds too:
Stocks flew to new all-time highs:
Data was mixed, via Westpac:
The second estimate of US Q2 GDP growth beat expectations, at 4.2% vs 4.0% expected and first estimate of 4.1%. Q2 corporate profits were firm (+3.3% q/q, +7.7% y/y) and offset a minor dip in consumer spending (to 3.8% from 3.9%). Core PCE remained unchanged at 2.0% as expected. Pending home sales for July were -0.7%m/m vs expected -0.3%.
French Q2 GDP met expectations (+0.2%q/q, +1.7%), while July consumer spending missed on the headline (+0.1%m/m, exp. +0.3%) but was offset by revisions to June (+0.3%m/m, prior +0.1%).
Brexit comments from officials were GBP supportive. EU Brexit negotiator Barnier said that the EU is “prepared to offer a partnership with Britain such as has never been with any other third party”. UK negotiator Raab gave a standard update on negotiations (in contrast to the spat that UK media said it would be) but by saying that there was leeway on the intention to reach agreement by the EU Summit (18-19 October) he fuelled media speculation of an extra EU summit on Brexit in November
US GDPNow is still smashing it:
EM currencies are still crashing despite the US dollar falling; Turkey, Argentina, Tunisia all copped it.
But there is no doubting the driver of returns for Aussies overnight. Yesterday’s Westpac rate hike slammed the AUD lower as US/Australian bonds spreads hit new wides with the two year breaching 70bps for the first time since 2000:
MB Fund’s US decoupling thesis is in melt-up:
David Llewellyn-Smith is chief strategist at the MB Fund which is long US equities that will benefit from a falling Australian dollar so he is definitely talking his book. Below is the performance of the MB Fund since inception:
If the ideas above interest you then contact us below.
