Bond carnage continues as Trump makes USD ‘great again’
• Market moves from last week continued during the Asian morning Monday.
• Investors keep selling US bonds as they are concerned of higher future inflation.
• This is fuelling USD strength, as higher inflation could cause the Fed to hike rates quicker than previously anticipated.
• This may also be the reason behind the recent collapse in gold, as higher interest rates are usually negative for gold prices.
• These moves may continue for a while, at least until markets turn back to econ. data.
• Speakers: Dallas Fed President Robert Kaplan.
As for the rest of the week:
• Tues: UK CPI and US retail sales, both for Oct.
• Wed: UK employment data for Sep. Both the unempl. rate and avg. earnings are exp. unchanged. We see downside risks to the unempl. rate. If so, this may support GBP.
• Thurs: UK retail sales and US CPI, both for Oct.
• Frid: Canada’s CPI rate for Oct. is exp. to rise, which may support CAD.