Greenback Strong, Yields Hit 7-Year Maximum

Market Reviews

The greenback has significantly increased but didn’t manage to breach a short term resistance levels versus the single currency and Pound. 10 year yield rose to the 7-year maximum of 3.90 and then closed at 3.08. John Williams (San Francisco Fed President) noted that the r-star neutral rate remained at 2.5%, regardless improving economic growth. William says Fed should revise its forward guidance.

In political news, North Korea threatened to cancel meeting between Kim Jong Un and Donald Trump that was scheduled to be on June 12, due to the statement made by Trump’s national security adviser John Bolton. Bolton said that North Korea could follow a Libyan model of nuclear disarmament. North Korea’s vice-foreign minister Kim Kye-gwan claimed Bolton’s suggestion was “not an expression of intention to address the issue through dialogue”. And, “it is essentially a manifestation of awfully sinister move to impose on our dignified state the destiny of Libya or Iraq which had been collapsed due to yielding the whole of their countries to big powers.”

North Korea’s Leader stated that if the US “corners us and unilaterally demands we give up nuclear weapons we will no longer have an interest in talks and will have to reconsider whether we will accept the upcoming DPRK-US summit”. And, “if President Trump follows in the footsteps of his predecessors, he will be recorded as more tragic and unsuccessful president than his predecessors, far from his initial ambition to make unprecedented success.”