Key facts
- US payrolls unexpectedly fell in July.
- Fed Governor Lisa Cook is facing political pressure.
- Markets are uncertain about the Federal Reserve's next rate hike decision.
- Federal Reserve Chairman Kevin Warsh advocates for less forward guidance.
- Oil prices rose 5% amid fading hopes of a U.S.-Iran peace deal.
- China's factory-gate inflation and CPI slowed more than expected in July.
Federal Reserve Governor Lisa Cook is facing renewed political pressure as markets digest a surprise drop in U.S. payrolls and anticipate upcoming inflation data. Investors remain uncertain about the Federal Reserve's next interest rate move, with Treasury yields showing only modest declines. The yen experienced its largest decline against the dollar in G10 FX, falling through 159.00/$, as speculation about potential Bank of Japan policy shifts continues. Meanwhile, China's factory-gate and consumer price inflation slowed more than expected in July, indicating weak domestic demand.
Oil prices jumped 5% on Monday as hopes for a U.S.-Iran peace deal and the reopening of the Strait of Hormuz faded. Hedge funds experienced a turbulent July, particularly in technology-focused funds, with significant portfolio value plunges and deleveraging observed. The market is closely watching for potential Bank of Japan rate hikes and the resolve of policymakers in managing currency interventions.