US ISM Services and ADP Employment data came in slightly softer than expected overnight, taking the froth of equity markets which seem to be struggling for momentum at these lofty heights, especially technology. US yields spiked early on a US Treasury debt ceiling scare before retreating as the session wore on. That also served to take the wind out of the sails of the US dollar.

Oil fell after the official US Crude Inventories data despite a massive drop in the headline number. It may have been a buy the rumour, sell the fact moment after the fall was telegraphed by the API data yesterday. A weaker US dollar and a reversal of the bond yield spike duly saw gold book some modest gains. In the crypto-space, the mania continued, with dip-buying notable on bitcoin. Business as usual then.

Various Fed Governors and Treasury Secretary Yellen spent the evening soothing investors’ nerves after Ms Yellen’s tightening comments spooked markets. It appears to be mission achieved at this stage, and this story is quickly slipping from the news.

Nobody can complain about a lack of volatility this week, with decent ranges in most asset classes. One thing is apparent, though, despite the noise, there is a decided lack of directional momentum and uncertainty. That has led to very choppy, but ultimately, back and forth ranging markets. Friday’s Non-Farm Payrolls should resolve that state of affairs. However, the 1.0 million-plus expectation becoming very crowded as the week goes on. Inflationistas and bond vigilantes like myself may not get the result we expected, even if the numbers come in at 1.10 million. The US dollar could fall along with US yields and woe betide us if the Non-Farms “only add” 900,000 jobs. Equities and precious metals should be the winners in this scenario.

Meanwhile, China and Japan have returned from holidays today, with Japanese markets notably hitting the buy button as soon as they walked through the door. Early equity trading in China is more subdued after the PBOC withdrew CNY 40 billion of holiday liquidity via the repo market. Geopolitical tensions may also be hanging over the mainland, with the G-7 meeting unusually united and forceful in condemning China’s alleged repression of the Uighurs and the US supporting Taiwan entry to the WTO. The upcoming US tariff review on Chinese goods is increasingly looking unlikely to be changed materially, not that it has mattered when one looks back at China’s export performance over the past year.

Looking ahead in Asia, Bank Negara Malaysia (BNM) announces its latest rate decision this afternoon. The street, including the author, is expecting the reference rate to remain unchanged at 1.75%. However, BNM is about the only ASEAN central bank with any monetary gas left in the tank, and a sneaky 0.25% cut is not beyond the realms of possibility, particularly with Asian nerves frayed over the resurgence of Covid-19. That would be positive for local equities and bearish for the ringgit in the short-term.

Will Bank of England taper?

The Bank of England (BOE) also announces its latest policy decision today. Again, the only threat to an unchanged reference rate and QE target would be some tinkering with tapering. Unlikely but possible. Sterling is resting at 1.3900 this morning, and GBP/USD has formidable resistance at 1.4000. A future tapering indication hint likely sees 1.4000 taken out tout suite and another bout of sterling strength in the days ahead.

US Initial Jobless Claims will be of passing interest, with new claims expected to fall to around 530,000. In all likelihood, it will spur more of the tail-chasing short-term volatility we have seen this week, with investors tying themselves up in deeper knots. This week is all about the Non-Farm Payrolls, and as I have stated, I am nervous that more and more pundits are joining me in the 1.0 million-plus club.