Johnson Set to Block Parliament

Sterling is the biggest loser while silver continues to soar amid reports that UK PM Boris Johnson will suspend parliament in order to block MPs' efforts to pass legislation aime at avoiding a no-deal Brexit. Parliament returns next from the summer holiday but now it's expected to be suspended for longer than usual. More below. The US yield curve inverted more deeply and in new ways after a controversial OpEd by the former head of the NYFed.

فيديو المشتركين الآن جاهز- إستغلال التذبذبات و سرعة الخروج

The news of Parliament suspension come less than 24 hours after UK opposition parties released a joint statement saying they would fight to block a no-deal Brexit. Yesterday's statement lifted GBPUSD to 1.2300 – the highest since July 28. UK govt officials confirmed parliament would return next Tuesday, but would likely be suspended again around Sep 9-10 until October 14, when a new Queen's Speech will be held. All eyes shall turn to and Labour leader Corbyn who is expected to lead a vote of no-confidence vote in Johnson's government next week.

Destabilizing Confidence

A strong consumer confidence reading on Tuesday raised the risk that the Fed might not be as dovish as expected. We warned about the counterintuitive market reaction to a strong consumer confidence print and that's exactly what unfolded yesterday. The reading of 135.1 was much higher than the 129.0 consensus. It was compounded by the present situation index rising to the highest since 2000.

US stock markets had been higher ahead of the report but slowly sank afterwards to finish lower. The spillovers were smaller in FX but the dollar was generally stronger and gold rallied once again. A number of Fed officials highlighted the importance of the consumer at Jackson Hole and the strong reading will spark some arguments that the Fed is loosening rates when the data doesn't warrant it.

That sentiment helped to pin the front end of the bond curve close to unchanged on the day while the long end rallies on fear that it would eventually prove to be a mistake. That pushed 2s10s five basis points below inversion and also inverted 3-month bills below the 30-year bond for the first time since 2007.

Looking ahead, we will hear from the Fed's Daly and Barkin in the day ahead in what could add further Fed uncertainty.