Risk

• So far today, risk has remained in a more positive zone.
• At the very least, equities are getting some breathing room as the week comes to a close. There is still the US session to navigate, and if the wild swings this week have taught us anything, it is to never discount a change in sentiment before the closing bell.
• But, for the time being, there are some encouraging signs. European indices are up 1.2 percent to 1.6 percent, while US futures are up as well, at least ahead of North American trading.
• On the day, S&P 500 futures are up 1.1 percent, Nasdaq futures are up 1.7 percent, and Dow futures are up 0.8 percent.
• Bond yields are also rising, with 2-year Treasury yields rising 6.6 basis points to 2.588 percent and 10-year Treasury yields rising 8.5 basis points to 2.902 percent. In FX, the recent dollar rally has taken a breather, with the greenback holding more mixed with no real technical significance so far today.

ECB

ECB policymaker Mario Centeno: APP should end in the first few weeks of Q3, rate hike “sometime later”

A departure from Centeno’s recent hawkish remarks, but that is to be expected given his background. He also adds that there appears to be no signs of inflation expectations de-anchoring, emphasising his sense of urgency in the matter.

South Korea

South Korea reports that North Korea appears to be preparing for another nuclear test.

This will be North Korea’s seventh nuclear test, according to Yonhap, citing information from South Korea’s presidential office.

There are no specifics on what the test will entail, but it will be North Korea’s seventh such move in the last two decades.

The first occurred in 2006, followed by 2009, 2013, twice in 2016, and again in 2017.

Europe

European equities begin the day higher. A modestly positive tone to begin the session

Eurostoxx +0.7%, Germany DAX +0.7%, France CAC 40 +0.7%, United Kingdom FTSE +0.8% & Spain IBEX +0.6%

The upbeat mood is carried over from yesterday’s late bounce in US equities, with US futures also pointing higher for the time being. S&P 500 futures are up 0.7 percent, Nasdaq futures are up 1.2 percent, and Dow futures are up 0.6 percent on the day.

With the dollar and yen on the back foot in the major currencies space, it is providing a better risk backdrop for markets in general. However, they are only minor moves against the dollar after a string of gains, so they aren’t technically significant so far.

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