The American session was devoid of any American data today. The only economic report was the Ivey PMI from Canada, which came in stronger than expected. Despite the gains, the Canadian dollar weakened and was one of the weakest major currencies.
Today the US dollar was the strongest among the major currencies, and this came despite the decline in interest rates during the day.
Granted, US interest rates are off their lows and two-year bond yields are almost unchanged, but benchmark 10-year bond yields are still down -3 basis points on the day.
The US Treasury today auctioned $58 billion of three-year bonds with a negative tail of -0.3 basis points and a strong bid to cover at 2.63X (versus a 6-month average of 2.57X). These results compare favorably to last month when the issue was sold at a tail of +2.0 basis points with a much lower bid-to-cover bid of 2.50X.
Tomorrow, the second phase of this week's coupon auction will take place at 1pm with the sale of 10-year bonds. On Thursday, the Treasury will complete the coupon auctions by selling 30-year bonds.
The weakest currency today was the Japanese yen for the second day in a row.
The Fed's Kashkari released his monthly “article” and also held a question-and-answer event. Below is a summary of his comments.
Federal Reserve official Neel Kashkari commented on the housing market's resilience in the face of tight monetary policy, suggesting that this resilience may signal a temporary increase in the neutral rate, which he revised modestly to 2.5% from 2%. Despite progress on inflation in the latter half of 2023, this progress has stalled since then, raising questions about the continued effectiveness and constraint of current policy measures. Underlying economic demand remains strong, as evidenced by recent GDP data which was primarily affected by changes in inventories and net exports, rather than a slowdown in consumer or business activities. Kashkari cited concerns about the recent soft jobs report and rising new rental prices, which could indicate underlying inflationary pressures. Although further rate hikes are not ruled out if necessary, Kashkari believes the most likely scenario is for the Fed to maintain interest rates current, with potential cuts conditional on a continued slowdown in inflation. He stressed that the Fed's decisions will remain data-based and will not be influenced by external factors such as elections, while strictly adhering to the 2% inflation target and expressing the need for patience in monetary policy, indicating that interest rates may remain steady for longer than the expected rate. The audience expects.
In the US stock market today, major indices were mixed but little changed.
- The Dow Jones Industrial Average rose 0.08%.
- The Standard & Poor's index rose 0.13%.
- Nasdaq fell -0.10%
The Russell 2000 small-cap index rose 0.19%.
In the US debt market:
- The two-year yield is 4.830%, +0.8 basis points
- The 5-year yield is 4.472%, -1.0 basis points
- 10-year yield 4.461%, -2.8 basis points
- The 30-year yield is 4.602%, -4.0 basis points
Despite rising geopolitical tensions outside Israel, crude oil is trading at $78.31, down -$0.17 on the day.
Bitcoin price has been trading within a fairly narrow range between $62,818 and $64,389.
Gold fell -$11.87 or -0.51% to $2,313.90.
