News that policymakers in the US have struck a deal to increase the $22tn debt ceiling was viewed as a risk positive by equity markets.
The deal reduced the risk of a default and increased the likelihood of fiscal stimulus. Combines expectations of upbeat earnings results this week Asia equities were green across the board, however broader macro safe-haven trades did not soften.Reaction to current earning season has been muted as Tech shares led the S&P 500 higher. EURCHF has reached critical psychological support of 1.1000.
At this point, there has been no signal from the SNB as to their strategy. The market is moving cautiously but continues to push CHF higher. With a lack of 1st tier data markets will be watching events in the UK. Boris Johnson is expected to become the UK next prime minister today. However, this provides zero additional clarity into his strategy to execute Brexit and his "do or die" pledge to deliver Brexit.
We remain negative on the GBP outlook as we suspect that new Prime Minister Boris Johnson will drive towards no-deal exit from the EU rather than negotiate sticky points. Finally, Bitcoin fell below $10k as expectations for Fed interest rates cuts (debasing of US dollar) has been reduced. Increasingly we see the “king” of crypto as a gauge for Central bank's monetary policy. US existing home sales and the Richmond Fed index are expected, but none of them will shift market direction.
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