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Yellen's due to speak, Brexit risk hits the pound, and commodities rally. Here are some of the things people in markets are talking about today.
At 12:30 p.m ET today, Federal Reserve Chair Janet Yellen is due to give a speech in Philadelphia which investors will watch very closely following Friday's surprisingly bad jobs data. The market implied odds of Fed rate hike this summer collapsed after the release of Non-Farm Payrolls report, and now the market isn't pricing a greater than 50 percent chance of a hike until December. In a speech delivered this morning in Helsinki, Federal Reserve Bank of Boston President Eric Rosengren said it's important to see whether Friday's report was an anomaly, rather than reflecting a broader slowdown. Yellen is due to join a roundtable discussion at 2:30 p.m. at the same event, so there will be plenty to keep an eye on this afternoon.
Brexit risk rushes back
The British pound gave up all its post-jobs data gains against the dollar this morning after polls over the weekend showed momentum swinging back towards the 'leave' campaign. Traders are buying volatility ahead of the vote, with State Street Global Advisors recommending selling U.K. and European equities and Goldman Sachs Assets Management saying it will be heading into the vote “with little U.K. risk in portfolios.” In a surprising development, the BBC reports that British members of parliament, where there is a large majority in favor of remaining in the EU, are considering using that advantage to keep the UK in the single market in the event of a win by the 'leave' side. The pound was trading at $1.4392 at 5:59 a.m. ET.
The weaker dollar following Friday's jobs data is giving a lift to commodities. West Texas Intermediate for July delivery was at $49.20 a barrel at 5:54 a.m. ET, with Brent at $50.28 a barrel. Saudi Arabia is raising prices on sales of oil to Asia amid robust demand. In industrial metals, zinc is climbing for an eighth day, its longest winning streak since December 2013 as supply concerns mount. Gold is 0.2 percent lower this morning after jumping 2.7 percent on Friday.
London stocks rally
The MSCI Asia Pacific Index added 0.3 percent overnight, with the rising yen hitting stocks in Japan where the Topix index slipped 0.4 percent. In Europe, the Stoxx 600 Index was unchanged at 6:07 a.m. ET while in London equities were higher with the FTSE 100 Index adding 0.9 percent as the pound weakened and miners rallying more than 4 percent on increasing commodity prices. S&P 500 futures were 0.1 percent higher.
Chinese President Xi Jinping highlighted areas of cooperation between his country and the U.S. at the start of an annual meeting between top officials from both nations. The president did not mention simmering tensions over the South China Sea, but did say that "it’s not scary to have disagreements.” Xi may be more concerned about the domestic economy at the moment though, as a slowdown in industrial production starts to pinch, while the level of debt in the country may be much higher than previously estimated, according to Goldman Sachs Group Inc.
What we've been reading
This is what's caught our eye over the weekend.
- The oil rally is making sugar more expensive.
- Land below zero: Where negative interest rates are normal.
- Europe's worst bond market doesn't look like it's getting any better.
- 'Unacceptable' inflation that may snap Russian rate pause.
- Megacaps are now S&P 500's curse as smart beta gets payback.
- Inconvenient truth about bond dealers and U.S. treasury auctions.
- Saudi Aramco, a race to the bottom?