Rates as of 0500 GMT

Market Recap

Risk appetite has come back! See my Weekly Outlook for an explanation. To sum up, financial conditions have tightened considerably as the markets frontruns central bank tightening. Because of this, inflation expectations have come down. Less expected inflation means less expected tightening. That leads to a revival in growth expectations.

The result is a recovery in risk appetite. Along with that, the commodity currencies recovered and the safehaven yen and USD fell. No big surprise there.

Markets were encouraged Friday by the personal income spending data see above. Although incomes were up less than expected, spending was up more than expected, showing that consumers are willing to run down the large amount of savings they accumulated during the pandemic to maintain their standard of living. The household savings rate has fallen to 4.4, the lowest since 2008.

Stocks have been recovering as well. The SP 500 and NASDAQ were both up over 6 last week.

Other points

Just FYI, there may be a meteor shower tonight. The recent lunar eclipse was a bust where I live, but I hope to see some shooting stars tonight. Unfortunately its not certain some experts expect well see it, some dont.

Commitments of Traders CoT report

The only major change this week speculators became significantly more bullish EUR as EURUSD recovered to the 1.07 level. This obviously reflects the increasing conviction in the market that the European Central Bank…