market:
- Gold fell by $32 to $4582, silver down by 3%
- WTI crude oil fell 32 cents to $59.51
- US 10-year yields rose 6.7 bps to 4.23%
- JPY is ahead, AUD is behind
- S&P 500 down 0.1%
Monday is a holiday and on Friday the markets mostly trade like an extra long weekend. News flow was steady with some talk from the Fed before the midnight blackout but ultimately, FX market movement was minimal to end the day.
Beneath the surface it was something much more alive. Big steps were taken that day when Trump told Hassett at an event:
“If you want to know the truth I really want to keep you where you are.”
This caused the betting market to reduce the odds on Hassett to 17%. However, broader market reactions could push Trump back toward Hassett. Treasury yields rose 5-6 bps across the curve on the prospect of a less-than-neutral Fed chair. That long-dated yields would also rise is surprising given that Hassett could fan the flames of inflation.
Similarly, the US dollar strengthened in the headlines and this is the opposite of what Trump generally wants. Stock markets also declined slightly, although not materially.
The NAHB numbers highlighted a major weak spot in the US: housing. There is talk that the Trump administration will let Americans cancel 401K retirement plans to buy homes as it faces poor polling on affordability. Today’s rise in long-term yields won’t help either.
The coming week is short, but it will include some key economic dates and we may get the Supreme Court’s decision on tariffs (Tuesday was declared as decision day). Have a great weekend.
