Fears of faltering economic momentum is what is weighing on global stock markets and boosting bonds with the German 10 yr bund yield in particular at fresh record lows and the US 10 yr yield back to the lowest since Mar ’09. In terms of what to do from a policy standpoint, the WSJ today gives us ‘inside info’ on the thinking of the Federal Politburo, I mean Federal Reserve, on how to deal with their balance sheet and its impact on policy. In Europe, the EU’s Rehn talked about initiating random bank stress tests to keep investors up to speed in order to reinforce “confidence for transparency and sound and solid analysis.” The yen continues to be a beneficiary of the global growth concerns and is at 15 yr highs vs the US$ and 9 yr highs vs the euro. The Japanese PM and FM tried jawboning it lower today but to no apparent avail. US July Existing Home Sales will include some pre and post tax credit closings so will thus be distorted.
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