Morning Update – 11/08/2017 – by Arjun Lakhanpal

Morning all.. Wall St had another wobble as Trump and Kim continue to play “Chicken” and it seems that any missiles sent anywhere near Guam could now spark a response. Pres Trump: Maybe fire and fury statement on North Korea wasn’t tough enough; North Korea should be very, very nervous if it does anything to US because things will happen to them like they never thought possible: This sending the VIX to 9-month highs . It could be a very nervous weaken for those long risk. The S&P closed down 1.5% and the NASDAQ down 2.1%. Asian stocks also tumbled but the Nikkei was closed. HK was down 2% and Shanghai down 1.5%. In a clear risk off session, USDJPY hit a low of 108.90. US 10yr yields sit down at 2.20% which is weighing on the dollar. AUD was the biggest loser overnight down 0.3% after the Australian prime minister came out to say that Australia would invoke its military alliance with America should North Korea regime attack the US. RBA’s Lowe: global economy strengthened since last meeting, growth surprised on the upside recently; A further rise in AUD would cause a slower rise in inflation & slower reduction in unemployment. However USD weakness saw AUD bounce. Gold continues to hover at its 9-week high and Sovereign bonds continue to gain driving down yields, the Australian 10yr note was down 7bps. Focus ahead today will be on US July CPI data, market consensus is for the headline rate to accelerate to 1.8% from 1.6 and core to remain at 1.7%. However, some feel geo-political tensions may still dominate, especially as we head into the weekend so this data may have less impact than usual. This morning we get French, Italian & Spanish CPI data (final).. Good luck…