US bond yields higher, USD struggles, Bitcoin at record highs. But who cares because Spurs won the cup...

Good morning

Well let’s start with the most splendid news from last night.  Yes, Spurs beat Man Utd to win the Europa League final, in doing so gained entry to the lucrative Champions League next season and also hopefully puts an end to all those ‘Spurs don’t win trophies’ comments that have plagued the club since they last won silverware back in 2008, which in turn had been their first trophy for nine years. 

While the result was perfect, it wasn’t a great game, both teams lacking in quality which highlights why they are down near the bottom of the league table.  I’m sure there will be many questions asked as to how Spurs, and it could have been Man Utd, gets into the most prestigious tournament after such a horrific season, but them’s the rules and I for one am not arguing. 

The question now is whether Ange, the Spurs manager, keeps his job.  He says he is in the process of building the team into something special but they look far from a special team right now.  The most interesting thing last night was how Spurs changed their tactics for this match, choosing to defend deep rather than Ange’s usual ‘attack at all costs’ idea.  Ange has been criticised heavily this season for sticking with his attacking plans when it clearly wasn’t working, and now at last he’s changed and it paid off. 

Anyway, we’re not here to talk football.  To the markets, and the ‘sell US’ theme is certainly still with us.  US equities dropped around 1.5-2.0% yesterday, while their 10 year bond yields are almost 4.6% and the 30 year yield which had been as low as 3.9% back in Sept 2024, is now approaching 5.1%, a weak 20 year Treasury auction yesterday, perhaps led by concerns over Trump’s tax and spending bill, not helping at all.

GBPUSD has held above 1.3400, EURUSD has held above 1.1300 and USDJPY is currently near the lows around 143.35, all highlighting the weak USD theme.  Very difficult to see what will turn this, and we start asking the question of ‘What comes next in GBPUSD, 1.30 or 1.40?’.  At the moment you’d have to have your money on 1.40, surely?  Of course, now I’ve said that, we’ll be at 1.30 this afternoon!

Elsewhere, S&P have warned of risks to New Zealands rating, which pushed NZD lower.  AUDNZD is now 1.0870, GBPNZD back up towards 2.2650, not far off the recent highs. 

Trump has said to EU leaders that Putin isn’t ready for peace, something I’ve been saying for a while but it’s taken some time for Trump to get it.  Therer is still some hope for a ceasefire with Ukraine and Russia potentially due to meet next week in the Vatican, but I think Russia will make too many demands for Ukraine to be able to agree to much.  Whether the recent US/Ukraine minerals deal has any impact remains to be seen, but I can’t see Trump being happy if his ‘assets’ in Ukraine start coming under threat.

Bitcoin, one of my least favourite things in the financial markets, has benefitted from the weaker USD to push to record highs of almost $112,000.  I have to mention the poor guy who lost his hard drive with the password for 8,000 Bitcoin in a rubbish dump in Wales.  That is now worth almost $900m.

Today’s main events are EU, UK and US PMI’s.  We also hear from BoEs Pill and Dhingra.  Pill voted for unchanged rates at the last BoE meeting, while Dhingra called for a 50bps reduction, quite a difference of opinion there.   Worth watching for any headlines regarding EU /US trade talks, I’ve seen a few comments suggesting that some sort of tentative contact has been made.  The latest UK retail sales figures will be released early tomorrow morning, I’m never confident with those. 

Have a great day…

-  09.00 EU manufacturing, services PMI

-  09.30 UK S&P manufacturing, services PMI

-  11.50 BoEs Breeden speaks

-  12.00 BoEs Dhingra speaks

-  12.30 ECB minutes

-  13.30 BoEs Pill speaks

-  13.30 US initial jobless claims

-  14.45 US S&P manufacturing, services PMI

-  15.00 US existing home sales

-  16.00 ECBs Elderson speaks

-  16.35 ECBs de Guindos speaks

-  19.00 Feds Williams speaks

-  19.30 BoCs Macklem speaks

-  23.45 NZ retail sales

-  00.01 UK GfK consumer confidence

-  00.30 Japan CPI

-  07.00 UK retail sales