You Should Have Just Gone To The Bar.

Wednesday was largely a snoozer, with some Bitcoin chatter, some tax reform banter, and some Mueller news thrown in to spice up a session that, otherwise, was uneventful enough to warrant an early trip to the bar.

Generally speaking, this week’s theme (reflation back on in the U.S. as stocks, the dollar, and yields all rise in tandem) held, as there was no news “bigly” enough to change the narrative. Stocks were mostly flat, which translates to: still at or near record highs.

Yields and the dollar continued to rise on Wednesday, helped along by news that “something” on tax reform is going to be unveiled on September 25. And although whatever we do get on that front will almost invariably be disappointing, the news was enough to give the greenback a little lift and add to pressure on Treasurys:

DollarYields

As Bloomberg notes, “Treasurys sold off for fourth straight day, reaching session lows into 3pm ET futures settlement [as] an average 30Y auction following weak results for 3Y Monday and 10Y Tuesday failed to contain early weakness driven by concession and dollar strength.”

Do take a moment to appreciate the size of the move both in 10Y yields and in USDJPY off the Friday lows:

YieldsYen

Simply put: “big league.”

A day after surging on a hotter-than-expected CPI print, the pound fell as August wage growth disappointed:

GBPUSD

Basically, it’s going to be difficult to justify a hike when wages aren’t keeping up with inflation:

WagesInflationUk

BoE on deck tomorrow. Watch the vote. 7-2 is status quo, 6-3 would be a big deal.

Bitcoin has had a tough week, coming under verbal assault by Jamie Dimon, Mohamed El-Erian and, on Wednesday, Marko Kolanovic. Still, the big picture here remains the same (right up until it doesn’t):

Bitcoin

Crude had a good day, rising more than 2% to a 5-week high after the IEA said global demand should rise this year by the most since 2015. That comes a day after OPEC boosted its own demand projections and also on the heels of rumors about the cartel’s intention to extend production cuts possibly into the back half of 2018:

CL

Energy stocks outperformed on the day as a result:

XLE

The Nikkei was up a third day as the weaker yen (and Kuroda) continues to support:

Nikkei

USDJPY hit 110.69 before coming off a bit – that was the highest level in four weeks:

USDJPY

Finally, geopolitical risk is back on the table and if the last four years are any indication, that could mean a break from the low vol. regime. Whether that “break” turns into sustainably higher volatility depends entirely on central banks…

Risk

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