Daily Market Color July 6, 2016Risk Assets Rebound on Dovish Fed Minutes and Upbeat Data US stocks finished the day higher while Treasurys sold off marginally as a rebound in oil prices, dovish Fed minutes, and upbeat economic data boosted investor sentiment. The Fed minutes released today were from the June FOMC meeting, which was held just days before Britain’s unexpected vote to exit the EU. The minutes showed that policymakers were concerned with May’s weak jobs report and the potential for financial market volatility due to the UK referendum. While this Friday’s release of the June payrolls report is expected to show a stronger number than May, the Fed’s concerns over Brexit came to fruition, which will likely keep changes to monetary policy on hold in the near term. Risk assets have recouped much of their losses since the initial Brexit shock, but other signs of stress are beginning to emerge. Several UK real estate funds have frozen withdrawals and there is heightened concern over the health of the Italian banking sector. In terms of new US data releases, both the Markit US Services PMI and ISM Non-Manufacturing Composite surprised to the upside. The 56.5 reading of the ISM report was the highest since November, as new orders jumped and companies hired new workers. The data suggests the US economy rebounded in the second quarter and bodes well for Friday’s all-important June payrolls release. All three major US stock indexes finished the day up between 0.50% and 0.75%, while Treasury yields and swap rates are flat to up two bps in the front end and belly of the curve, and down 1-2 bps in the long end. Both WTI and Brent crude finished the day up over 2.50%.