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“OK, WHO LEAKED THE FED MINUTES?” (0645 GMT)
“Ok, who leaked the Fed minutes?,” Sven Henrich, founder of
NorthmanTraderm, asked jokingly on twitter after markets
suddenly switched to risk-off mode yesterday.
While one would typically expect investors to trade
cautiously a day before getting a better sense of what caused
the hawkish shift at the U.S. Federal Reserve’s June meeting,
the market price action was surprisingly decisive.
Government bond yields dropped, the dollar rose, the
reflation trade and cyclical stocks got hammered and traders
were suddenly ready to pay an extra premium for growth stocks,
particularly tech, which sent the Nasdaq to new record highs.
Market participants were hard pressed to find a single
catalyst for the mood swing but offered plenty of explanations.
COVID-19 fears (Delta variant surging), peak-growth fears
(ISM showing a cooling in U.S. services), the Chinese crackdown
on tech companies, falling…