US MARKET WRAP – USD Consolidates Post-Payroll Gains Ahead Of CPI Data Due On Friday

The USD operated in a narrow range. The EUR traded higher in the morning as a large Bund long position was liquidated, with the single currency ending the day just off best levels, below 1.18, vs. the USD. GBP ended the day virtually unchanged, while JPY operated in a narrow range. The NZD was the big mover within the majors, falling after the RBNZ inflation expectations metric printed lower than the prior reading in lieu of a weaker Q2 CPI release and in front of this week’s RBNZ decision. The NZD weakness also weighed on its Antipodean cousin as the AUD gave up its iron-ore inspired gains from the overnight session. The biggest FX mover came from the EM space as the ZAR rallied by over 1.50% against the greenback after South Africa's Parliament speaker allowed a secret ballot in President Zuma’s no-confidence vote, with the debate set to begin tomorrow.

US equities edged higher as the DJIA closed at a record high for the ninth straight session, with stocks benefitting from a relatively strong earnings season on the whole. However, the recent run-up has generated the usual concern regarding stretched valuations. Noted fund manager Leon Cooperman did suggest that the stock market is “fully valued,” but balanced this out by noting that has hasn’t seen anything which signals market 'euphoria.' The S&P 500 closed up 0.16% at 2,480.91, the NASDAQ closed up 0.59% at 5,934.73, and the Dow closed up 0.12% at 22,118.56.

Treasuries garnered support after a large block buyer of 10s stepped into the fold (again) in early Chicago trade, although long end corporate supply lead to 30s underperforming, and some very minimal bull steepening in the 5s30s space. Sep’17 10y T-note futures settled at 126.05+, up 3 ticks.

Oil was rangebound and relatively choppy, with WTI settling at USD 49.39/bbl, down USD 0.19. The OPEC technical meeting has generated no real headlines, although newswire sources suggested that Russia and Kuwait are meeting with other producers. We also found out that Nigerian oil production stood at 2.06mln bpd in July, while Libya’s Sharara oilfield (the country’s largest) resumed production after a weekend outage. There were also reports that Repsol and Statoil have pulled their foreign staff out of Venezuela, while Eni have only left essential staff in the country.

07 Aug 2017 - 21:00- Fixed IncomeData- Source: RANsquawk

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