Morning Brew July 8 2021

Good Morning,

The message from the FOMC minutes was less clear than hoped. The key messages were

• the recovery was strong but not completed,
• Inflation is high but largely transitory
• Unemployment still elevated

Probably the key message was that the Fed was that several Fed Members anticipate to start tapering earlier than previously anticipated but using a patient approach.

Almost more interesting than the FOMC Minutes was the fact that traders are expecting a raise if the debt ceiling in the near future. That will cause more bond issuances by the US. 10 Year Yields fell to below 1.30 % for the first time since February.

The USD Index fives up some gains in early Europe, currently 92.65 after a high at 92.80.

Equities could initially gain but futures came under pressure in the Asian session. Risk averseness was triggered by rising corona cases and worries that regulation may hurt tech shares as just seen with Didi.

Key Indexes are down 0.2-0.5% so not a huge move, EURUSD is trading at 1.1800 and Gold and Silver retreat to 27.90 and 1797. The Hang Seng fell below the 200 day Moving Average. Oil seems to have calmed a little after the Opec+ meeting/ Non-meeting turmoil, the CL contract seems to stabilize at around 72

The only key agenda item is the US Initial Jobless claims.

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Headlines:

• China is hinting at lower Reserve Ratio Requirements for banks to boost economic recovery
• Watch the Google stock after 37 US States filed a lawsuit against the company for abusing monopoly power in it`s play store.
• South Korea records the highest number of corona infections - though “only” (1275)
• Didi falls further to 11.93

(Refinitiv)