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In a market wrap, analysts at TD Securities explained that President Trump continues to ratchet up his criticism of Fed policy, first reportedly behind closed doors at a fundraiser and later directly to Reuters, though the market reaction has been muted so far.

Key Quotes:

“North American equities posted a modest gain on the day while rates rallied on both sides of the border.”

“Treasuries outperformed Canadian rates by 2-3bps across the belly and long-end, widening CAD-USD spreads.”

“The USD saw a broad selloff into the North American close on Trump’s comments, with EUR (+0.4%) and GBP (+0.3%) leading the advance, while CAD (+0.1%) and NZD (+0.1%) underperformed on the crosses.”

“RBA Minutes and a speech by Governor Lowe are the main risk events for this morning.”
What We’re Watching in Markets
“The USD looks stretched against nearly all the G10 currencies. Our cyclical valuation models show the USD sits around 2% overvalued and positioning indicators argue it is a well-populated trade.”

“Our HFFV shows the EURUSD trading a significant discount, suggesting room for a tactical bounce to 1.16. EURUSD vols also look rich, offering room for short vol plays too.”

“We believe July FOMC minutes could be more interesting than Jackson Hole. 5s30s should continue flattening, but talk of ending balance sheet runoff could steepen the curve.”