Stocks were lower, with the S&P -1.1%, carrying over into red Hong Kong and Nikkei futures this morning. Bonds were lower too: US 2-year Treasury yields were +3bp at 3.45% having tested up to 3.50%, and 10-years +1bp to 3.11% having been at 3.15%; German 2-year Bunds were +8bp to 1.14% and 10-years +3bp to 1.51%; and UK Gilts were little changed despite large swings, closing before former Chancellor and would-be PM Sunak warned that markets may lose faith in the UK economy. (GBP is the more likely channel than Gilts, one would think.)

In FX, CNY could not keep a foothold even despite another in a series of stronger-than-expected PBOC fixes. That a weakening currency cannot be 'fixed' even alongside a vast trade surplus that should be pushing it higher speaks to the upwards structural pressures on the US dollar, and the downwards ones on China and CNY.

Oil slumped around 5% after it became clear Iraq is not turning into the next Libya, and its oil output was not hit by recent unrest. (Although Iran, linked to the Iraq unrest, is playing hard to get with the nuclear deal again – presumably because of regional whispers that regardless of what Tehran does, President Biden has decided to sign the deal anyway, "because oil markets.") Other commodities were also mostly lower on the day.

The broad-based sell-off was helped by German inflation rising 8.8% y-o-y and strong US data in the form of consumer confidence (103.2 vs. 98 consensus, with expectations 75.1, up from 65.6) and JOLTS job openings (11.2m vs. 10.4m consensus, or around two jobs going for everyone officially looking for work).