DXY is refusing to go away.
AUD is looking shaky.
CNY stable.
Gold and oil becalmed.
Metals are troubled.
Mining bear is back.
EM stocks are filling the upside breakout.
Junk fine.
Yields firming a little.
Stocks stuck.
Morgan Stanley has a take I agree with.
The good news was tariff price pressures were muted in July.
The bad news was that services inflation firmed.
It is not as easy to ignore services pressures.
Most Fed speakers have tilted neutral to dovish after the July employment report, but the shift in Fed speak was less dramatic than the shift in market pricing.
If the Fed lets markets price in a rate cut with near certainty, it will be very difficult to avoid cutting in September.
We expect Powell to lean hawkish.
Yep, for the time being, the problem is this.
Trump’s immigration policies have stabilised wage growth at a strong 4%. This is terrific going into the AI jobs boom, but in the short term, it means a more wary Fed.
I do expect Fed cuts eventually, but for Jackson Hole to be hawkish and to put a dent in the AUD.
