Fed goes all-in for small businesses

Today’s news headlines:

‘Hong Kong hedge funds eye exit as national security law looms’. Hong Kong's hedge fund industry, which runs $91bn in assets, is looking to exit Hong Kong after China passed national security laws, effectively making it just another Chinese province. More than 420 funds may find themselves moving in short order. (Financial Times)

‘Fed faces tricky balancing act in recession response’. Fed officials are in a difficult position after last week's Non-Farm Payrolls number showed a dramatic rebound in employment. On the one hand, the May figure showed a decline of -20,537,000 jobs, so a rebound of 2,509,000 the succeeding month is only a correction and is unlikely to cause a serious change of tactic. On the other hand, the policymaking body may wish to refine its policy approach or change its communication strategy to make an eventual exit easier. (Financial Times)

‘Fed makes terms more favourable for Main Street Lending Program’. The Fed announced it was making its Main Street Lending Program broader in scope, lowering minimum loan amounts and expanding loan limits and increasing the tenor from four years to five. (Bloomberg)

Today's events, rates, and data 

  • There was more risk-on movement overnight as the Fed announced improvements to its small/midsized business programmes, spurring a strong market rally. There is little data out today, so markets are likely to be unimpeded by any poor ecostats and retain their risk buying momentum.

Today's events

UK BRC Retail Sales Monitor y/y: 7.9% vs 5.7% last month
EU ECOFIN meetings                                                        
UK Bank of England Monetary Policy Committee Member Jon Cunliffe speaks: 3:30PM

Interbank rates:

GBP/USD – 1.2675
GBP/EUR – 1.1251
EUR/USD – 1.1262
USD/CAD – 1.3430