Market News Today – USD (USDIndex 92.28) & Yields (10yr 1.20%) boosted.   – Fed Vice Chair Clarida continues the hawkish tilt. Earlier a big miss for ADP (330k vs 700k) had seen Yields tank to 1.127% (6-mth low) and USDIndex 91.80  before and a big beat for ISM Non-manu. PMI and Clarida’s “rate lift-off in 2023” and “tapering in 2021” comments. Equities mixed at close (USA500 -0.46% 4402)  Asian markets hold gains.  Oil inventories show a big build (+3.6m vs -3.2m & -4.1m last week) – USOil declined further to $67.40 (11-day low) Gold spiked to $1830 after ADP back to $1809 now. German big beat 4.1% vs 2.1%.

European Open –  The September 10-year Bund future is up 20 ticks, while Treasury futures are slightly lower, as investors continue to digest comments from Fed’s Clarida,  Clarida said he was surprised by the extend of the slide in global yields and indeed it seems surprising that with the recovery now pretty much confirmed, the German 10-year rate should be at -0.503%, i.e. lower than the deposit rate.

BOE Outlook – There is also some risk of a hawkish twist. The bank is generally expected to keep policy settings unchanged, but some wait for Bailey to explain the outcome of the review on how to best withdraw stimulus when the time comes. If he does so, it should not be seen as a sign of imminent tightening, but it could spook markets, especially after Clarida’s comments yesterday. DAX and FTSE 100 futures are little changed, after a lackluster session across Asia overnight. U.S. futures are fractionally higher. In FX markets EURUSD is little changed at 1.1835, while Cable is at 1.3890 ahead of the BoE.

Today – US weekly jobs, BoE Policy Announcement & Press Conference, Fed’s Waller. Earnings: Adidas, Bayer, Continental, Credit Agricole, Lufthansa, Deutsche Post, Siemens, Glencore, Rolls Royce, WPP, ViacomCBS, Kellogg.

Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.32%) Rallied from 80.50 support to 81.00 yesterday before closing lower at 80.75. Retesting 81.00 again today. Faster MA’s aligned higher, MACD signal line & histogram over 0 significantly and moving higher, RS 60 and still rising. H1 ATR 0.081, Daily ATR 0.710.

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Stuart Cowell

Head Market Analyst

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