A day of two halves

It was a day of two halves yesterday as far as markets were concerned with stocks selling off and bond yields plunging initially before both rebounded subsequently, US equities managing to close in positive territory in the process and yields ending only marginally lower on the day. Amid this, the main currency pairs didn’t do an awful lot, as the euro continues to hug the $1.12 level against the dollar and sterling remains at circa 92p against the single currency and just below $1.22 against the dollar

As central banks around the world cut interest rates, the Fed’s Evans pointed to a further reduction in US rates, noting the below target inflation on its own warranted another move over and above the 25bps easing last month while headwinds from rising trade tensions reinforced the case for lowering dates further. The market is now pricing in quite aggressive action by the Fed over the remainder of this year, with a cumulative reduction of the best part of 75bps expected over this period

The latest RICS survey of the UK housing market notes that some of the improvement seen in June reversed in July, with sales expected to be flat over the next three months and near-term price expectations weakening again. On the positive side, new buyer enquiries picked up slightly for the second month in a row (although this has yet to feed into any “meaningful increase in agrees sales”)

There was mixed trade data out of China overnight, with exports rising in year-over-year terms in July but imports falling on an annual basis, the latter pointing to soft domestic demand

It is quiet on the data front today with US jobless claims the only release of note