The feared crises in the US bond market appears to have been averted, at least for now! Treasury announced the expansion of the US Treasury ‘bond-buy-back scheme’, but said it would be funded by a US$1 Trillion, ‘General Fund’. That was enough to resume confidence in Treasury and their ability to stand in the market. All eyes now turn to the Fed and Jackson Hole, where Chairman Warsh will address the Symposium. Bond Yields tumbled, equities rose and the US Dollar was slightly weaker. The EUR rose back to 1.1670, while the GBP traded around 1.3650.
The weaker reserve allowed commodity currencies to consolidate, with the AUD trading around 0.7150, while the NZD pushed above 0.5950. Attention remains focused on inflation and especially the US PCE numbers, set to be released this week.
