Markets:
- Gold up $4 to $2015
- US 10-year yields up 4 bps to 3.50%
- WTI crude oil up $1.30 to $71.34
- S&P 500 up 0.3%
- AUD leads, JPY lags
Despite a poor Empire Fed survey and negative headlines from McCarthy on the debt ceiling, the market mood was positive on Monday as yields rose, stocks made some headway and the dollar lagged. The debt ceiling briefly derailed stocks but regional banks were solid and that put a floor under the market.
Later in the day, commodity currencies all made moves higher as the Asian ranges broke. Some of that was assisted by oil and commodity prices but the moves in FX were outsized and could prove fleeting if the upcoming China data today is soft.
The euro and yen mostly traded sideways in North American trade without any particular drama. In contrast, the pound made some headway and a return above 1.2500 but not above Friday’s high of 1.2540.
Overall, it was a cautiously optimistic start to the week and Fed comments underscored that a conditional pause is the playbook for the months ahead.