Despite some steep single-stock swings this week, the S&P500 is hovering close to record highs with gains of more than 17% for the year to date. The VIX volatility gauge remains subdued below 13 and, although November VIX futures are higher at 17.4, they too have slipped back this week.
French and British stocks were slightly lower.
Irked by sticky inflation updates from Australia and Canada this week and another heavy diary of new debt sales, U.S. Treasury yields popped up to two-week highs. French 10-year yields and debt spreads over Germany also nudged highe.
While Friday’s release of the U.S. PCE inflation gauge tops the week’s economic schedule, Treasuries first have to navigate Thursday’s latest jobless update and first-quarter GDP revision.
But the dollar remains buoyant around the world, not least against the ailing Japanese yen, which swooned to its weakest level since 1986 at just under 161 per dollar on Wednesday despite repeated warnings from Japanese officials about possible intervention. It steadied earlier today at about 160.50.
With uncertainty about the Bank of Japan’s next policy moves, some bond market players who participated in meetings with the central bank in June called on it to trim bond purchases in several stages to improve market liquidity, minutes of the meeting released by the BOJ showed on Thursday.
The euro and sterling also recovered some lost ground on Thursday ahead of the political events of the week ahead.
Sweden’s central bank held its key interest rate at 3.75% as expected but, in a dovish twist, it said that if inflation prospects remain the same, the policy rates can be cut two or three more times during the second half of the year.
In May, when it cut the policy rate for the first time in eight years, the Riksbank said it saw two more cuts in 2024.
In China, the yuan steadied from new year-lows but Chinese stocks fell again – with the CSI300 losing another 0.75% after news that China’s industrial profits rose at a sharply slower pace in May.
