How Bad Can It Get? (And What Makes It Stop?)
What’s in Today’s Report:
- How Bad Could It Get and What Makes It Stop?
- Weekly Market Preview: Can the June lows hold?
- Weekly Economic Cheat Sheet: Does economic growth stay resilient?
Futures are modestly lower as global bond yields rose further while the British Pound remained extremely volatile.
The British Pound plunged to an all time low vs the dollar earlier this morning before rebounding and the extreme volatility is adding to investor worries.
Economically, the German Ifo Business Expectations Index fell to the lowest level since March 2020 (84.3 vs. (E) 87.1).
Today there are no notable economic reports but there are numerous Fed speakers, including Collins (10:00 a.m. ET), Bostic (12:00 p.m. ET), Logan (12:30 p.m. ET) and Mester (4:00 p.m. ET). But, they shouldn’t move markets (we already know what the Fed intends to do).
Instead, the Pound and global bond yields (especially 10-year GILT yields) will determine trading today. Markets need to see the Pound stabilize and 10-year GILT yields stop rising (they’re up nearly 60 bps in two days) to inject some macro-economic stability into the markets. Don’t be shocked if the Bank of England announces a surprise rate hike today (or in the coming days) and if so, that should help global yields stabilize (which would be positive for sentiment and markets).