US real yields have risen sharply over the past few trading days – in a throwback to the March COVID-19 crisis period. Back then, the Fed stepped in to restore normal functioning to a disorderly US bond market. But with the US Treasury on an issuance splurge and the Fed with little new monetary tools left in its toolkit – this tantrum can easily turn into a rout. YCC soon...?

Whilst stocks continue to fly – FX & bond markets are starting to paint a more nervous picture. The latter may be more accurately reflecting the risks that lie ahead. USD-selling momentum has eased – a sign that 'easy money' in FX markets may be coming to an end. Turkey's FX problems may just be the start of problems in the EM space. Is this the calm before the storm?

This is Trump's playbook before the elections – shift the focus towards his 'America First' foreign & economic policies (and away from the COVID health crisis). As sitting President, action speaks louder than words to voters – so no surprise that we now see steps like US tariffs on Canadian aluminium imports. Elevated global trade uncertainty is not priced into markets.

Initial market reaction to Aug BoE policy decision has seen expectations of a 10bps Bank Rate cut pushed out to May 2021. While the BoE sees big costs to NIRP, the forward guidance on tightening (even though we're a long way from this) has left markets questioning whether the BoE will cut again. Doubt this is the signal the Bank wanted to send – expect subsequent comms to reaffirm easing bias.

Guest Speaker Andreas Steno Larsen notes that even if the Nordea folks have been clear EUR/USD bulls since spring, they find several reasons to worry for the USD bear crowd. Too early for >1.20 levels in EUR/USD. Check out Nordea's Weekly note – may be the most unorthodox Macro, FX & Rates newsletter globally!

Inaugural FinTwit Shadow MPC unanimously agreed to keep UK rates on hold this week – though one analyst saw potential easing to the Term Funding Scheme as a way to lower UK borrowing costs. Read the full debate over future BoE policy here.

There's usually something that trips global markets up in August and this year may not be any different given the growing list of risks. Along with COVID-19 second wave concerns, US-China tensions top that list – Trump is set to announce measures against Chinese tech companies (according to Mike Pompeo). How Beijing chooses to retaliate (escalate) will matter for financial markets this week.

Guest speaker Emile Marin - Economist from the University of Cambridge - joins us to discuss his new paper on the relationship between excess returns on foreign bond portfolios at different maturities and the relative yield curve slope across countries. He also talks about how the link between EM FX and capital flows is particularly strong at times of global distress. Luke Suddards (G10 FX Strategist) also joins the call to provide his daily FX markets update.

Briefing you on the key market events and investment themes for the day ahead – providing you with a fresh perspective on the latest macro developments and giving you concise analysis that will set you up for conversations that you may be having in the day.

Briefing you on the key market events and investment themes for the day ahead – providing you with a fresh perspective on the latest macro developments and giving you concise analysis that will set you up for conversations that you may be having in the day.