Daily Market Color July 12, 2016Risk Assets Extend Gains on Stimulus Bets and Growth Optimism Global equities rose for the fourth straight day, and are now trading at pre-Brexit levels, while Treasurys are selling off across the curve off the back of central bank stimulus optimism and reduced political uncertainty in Japan and Britain. The yen experienced its largest two-day slide since 2014 after PM Abe’s big win in this weekend’s election paved the way for more stimulus from the BoJ. Abe ordered Economy Minister Ishihara to draft new stimulus measures, and told former Fed Chairman Bernanke that he wants to speed up Japan’s exit from deflation. Bernanke reportedly told Abe that the BoJ still has tools available to further ease monetary policy. In the UK, the pound rallied on confirmation that the Conservative Party’s Theresa May will take over as prime minister tomorrow for the departing David Cameron. May supported the “remain” campaign leading up to the vote, but has provided assurances that there will be “no attempts to remain inside the EU and no second referendum”. In terms of new US economic data, a report showed wholesale inventories only rose 0.1% in May, missing the 0.2% gain economists were expecting. A large decline in automobile stocks was the main drag after inventories grew 0.7% in April. The mediocre growth in May suggests inventory investment likely weighed on second quarter GDP, after subtracting 0.2% from growth in the first quarter. A separate report showed job openings slid to 5.5 million in May, down from 5.79 million in April. The data suggests a slight reduction in demand for labor in the month of May. Aside from the data, there was a $20 billion 10-year note auction and a variety of Fed speakers including Tarullo (moderate, voter), Bullard (hawk, voter), Kashkari (moderate, non-voter) and Mester (hawk, voter). All three major US stock indexes are currently up close to 0.75%, while Treasury yields and swap rates are 3-10 bps higher across all major maturities. Oil also rebounded today, with both WTI and Brent crude trading up close to 4.50%.