Greetings,

Once again let's begin with the global bond market sell-off.

1. While Treasuries have stabilized, the 10yr Bund yield moved higher and remains in positive territory. Some analysts have suggested that, unlike the two sharp bond sell-offs in 2015, this one is likely to have a longer-lasting impact. Perhaps.

2. Swiss government bonds sold off for the 3d day in a row.

3. UK investment grade bonds are now down 4 days in a row. The selloff here is unlikely to persist because the BoE is about to start buying corporate bonds.

4. The 10yr JGB yield hit zero.

5. New Zealand's rapid government bond rally ended with a sharp reversal. 

1. Turning to the United States, Deutsche Bank points out that despite the longer-dated Treasuries' selloff, the "Fed’s estimate of the term premium is still close to historical lows". Some explain the negative term premium by the fact that longer-term Treasuries have been used as a hedge for equity portfolios. Therefore buyers of these bonds effectively pay an option premium. But now that the correlation between stocks and bonds moved into positive territory (more on this below) can the negative term premium be justified? 

Source:  ‏Deutsche Bank, @joshdigga

2. Fed's Dennis Lockhart is ready to hike rates.

Source: Atlanta Fed

3. The Fed's Lael Brainard stole the show on Monday. Some analysts thought that if she changed her tone from the traditionally dovish stance, it would telegraph a hike this month. Brainard remained against raising rates in her remarks, driving the probability of a September rate hike lower. However, can Brainard's perpetually dovish tone ever provide a hint of a hike if one was coming?

Source: Reuters

4. According to Deutsche Bank, the Labor Market Conditions Index (LMCI) is telegraphing a "recession".

Source: ‏Deutsche Bank

5. Separately, according to the St. Louis Fed, US "auto debt soars in the second quarter".

Source: ‏@stlouisfed

The two frothy Canadian housing markets are driven by foreign investment.

Source: @FactSet

1. Turning to the UK, the nation's economic surprise index seems to be peaking.

h/t: ‏Deutsche Bank, @joshdigga

2. UK's growth in self-employment since 2008 has been quite strong.

Source: NatWest, RBS

1. Now on to the Eurozone where French stocks seem to be the most "oversold" in Europe.

Source: Morgan Stanley, @acemaxx

2. Target2 claims on the Bank of Italy (by other central banks within the Eurosystem) hit a new record. More on this later.

3. Is Portugal's consumer inflation stabilizing?

4. Markets are still pricing a rate cut by the ECB within the next year.

Source: ‏Deutsche Bank, @joshdigga

1. Elsewhere in Europe, Poland remains firmly in deflation.

2. Czech bond yields are moving deeper into negative territory on anticipated currency cap removal next year. Is this a repeat of the Swiss record deflation?

Source: Investing.com

1. We now switch to China, where retail sales, industrial production, and fixed asset investment growth - all came in better than the forecasts.

Source: Investing.com

Source: Investing.com

Source: Investing.com

2. The PBoC has been guiding the renminbi lower.

3. The renminbi funding in Kong Kong has tightened again. Here is the CNH (offshore yuan) HIBOR.

Below is what happened to the CNH HIBOR curve over the past week.

Source Bloomberg

3. The WSJ (and others) have suggested that the PBoC had orchestrated a short squeeze in the offshore yuan (above) in order to keep the currency from declining.

Source @WSJ

The PBoC denies it.

Source: CNBC,  h/t @MattGarrett3

4. Separately, after a sharp selloff, Hong Kong shares are still up on the month.

5. China's steel futures are falling again. Has the reaction to Beijing's cutting steel overcapacity been overdone?

Source: barchart.com

1. In other emerging markets, the Mexican peso got hammered - now over 19 peso to the dollar again.

Source: myfxbook.com

2. These two charts suggest that more RBI rate cuts are coming. India's CPI was lower than expected, while industrial production was a significant miss.

 

Source: Investing.com

3. We had a massive withdrawal from EM bond funds.

Source: @bfly, @lisaabramowicz1

1. In the funding markets, the US LIBOR is grinding higher.

Source: @businesscycle

2. Rising funding costs (driven by looming US money market regulation), forced foreign banks to reduce their dollar-based leverage.

Source: Nomura,  ‏@joshdigga

1. In the equity markets, we now see the bond-equity correlations moving higher. As discussed above, longer-dated Treasuries can no longer be used to hedge stocks. Does that mean that the Treasuries term premium should begin rising?

Source: JPMorgan, ‏@Schuldensuehner

2. The WSJ points out that the volatility spike we saw last week was accompanied by a jump in trading volumes.  

Source: @WSJGraphics, @WSJ

3. Bank margins are drifting lower. That's why bank executives are promoting rate hikes.

Source: Deutsche Bank, ‏@joshdigga

Source: @CNBC

1. Turning to commodities, here is the OPEC oil production since 1962. Does it look like these nations are about to freeze production?

2. Is the palladium rally over?

Source: Investing.com

Finally, for those who are interested in financial regulation, here is a nice summary of the Financial Choice Act (FCA) - the Republican proposal to replace Dodd-Frank (from Amy Poster).

1. Turning to Food for Thought, "in which countries do women outlive men by more than a decade"? (via @wef) 

Source: ‏@wef

2.  App-based communication tools are making some telecom services less relevant. 

Source: @WSJGraphics

3. Microbreweries vs. religion.

Source: ‏@ECONdailycharts

4. Lawyers really like Hillary Clinton.

Source: ‏@WSJGraphics, @Tmp_Research

5. According to Pew, the US "voter satisfaction with the choice of presidential candidates is at the lowest point in decades".

Source:  @pewresearch, @Tmp_Research

Source:  @pewresearch, @Tmp_Research