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BONDS

Gilt/Bund test that 2019 peak

GBP

Extending losses

US TSYS

SOFR,GC Rates Steady Monday

US EURODLR OPTIONS

Morning trades

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USD/JPY snapped its five-day winning streak Wednesday, as a marginal miss in monthly U.S. core CPI and an in-line deceleration in headline inflation poured cold water on prospects of the Fed bringing forward its taper plans. This pulled the rug from beneath the greenback, while a solid 10-Year Tsy auction and a resultant dip in U.S. Tsy yields generated further selling pressure.

  • The pair last trades at Y110.42, little changed as we type. A further pullback under Aug 4 low of Y108.72 would suggest that a bearish reversal is taking shape. Conversely, a rally above yesterday's/Jul 7 highs of Y110.80/82 would clear the way to Jul 2 high of Y111.66.
  • A panel of experts advising the Health Ministry warned that strain on the healthcare system in Tokyo and other localities is reaching a critical phase, as Japan recorded another daily record in new Covid-19 infections. Sankei reported that the central government is considering widening areas covered by the state of emergency and could extend existing rules through the end of September. Officials could make the decision next week.
  • Japan's monthly PPI headlines the local docket today.