Copper, a barometer for the global economy, drops to a 2-year low on trade war fears
“The combination of a disappointing Fed and an escalating trade war appears to be too much for this fragile global economy. The summer breakdown in copper…” said the Sevens Report’s Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures have recovered from overnight losses that were spurred by a weaker than expected yuan fixing by the PBOC and are now higher with EU markets as easier than expected central bank policy overseas is helping offset trade war angst and Forex concerns.
The Reserve Banks of New Zealand and India, and the Bank of Thailand all eased policy more than expected overnight triggering dovish money flows across asset classes underscored by new highs in gold (+1% to over $1500/oz.) and a global bond rally.
Economically, German Industrial Production was -1.5% vs. (E) -0.4% which largely contradicted yesterday’s solid Manufacturers’ Orders print.
There are no economic reports to watch today but there is one Fed official scheduled to speak: Evans (9:30 a.m. ET) and there is a 10 Year Treasury Note auction at 1:00 p.m. ET which could move markets, especially considering the 10s-2s yield spread is testing the lows of the year this morning, below 10 basis points.
Aside from those events, investors will remain focused on any new developments regarding the trade war as the latest tariff announcement (last Thursday) was the main source of the recent spike in volatility.
Wall Street reactions to China trade escalation marked by fear, uncertainty
“It’s not good, obviously. I think that it really surprised a lot of people and I think it underscores that this is not a problem that’s going to be solved in the near-term…” said Tom Essaye, a former trader who founded “The Sevens Report” newsletter. Click here to read the full article.
U.S. markets rebound after China moves to strengthen yuan
“Going forward, stabilization in the U.S.-China trade war is now the most important key to broader market stabilization,” analyst Tom Essaye said in a note to clients. Click here to read the full article.
Dow jumps 300 points as Wall Street rebounds from the worst day of the year
“Going forward, stabilization in the U.S./China trade war is now the most important key to broader market stabilization…” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.
“Going forward, stabilization in the U.S./China trade war is now the most important key to broader market stabilization…” wrote Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.
What’s in Today’s Report:
The trade war continues to dominate the markets as the designation of China as a currency manipulator by the U.S. Treasury caused a sharp selloff in stock futures last night. But the PBOC intervened to “fix” the yuan back below $7/CNY which helped global markets stabilize overnight.
German Manufacturers’ Orders jumped 2.5% vs. (E) 0.6% in June but the details showed a continuation of soft demand in the Eurozone, offsetting the headline strength.
The trade war, and any further developments on the topic, will remain the market’s main focus today however there are a few other potential catalysts to watch.
Economically, the June JOLTS Report (E: 7.293M) will be released mid-morning and then shortly after lunch, there is a 3-Yr Treasury Note Auction (1:00 p.m. ET) which will be important because Treasury auctions have been moving the stock market lately.
Lastly, there is one Fed speaker: Bullard at 1:05 p.m. ET and investors will be listening closely for any clues as to what the Fed’s policy plans are into the end of the year.
What’s in Today’s Report:
Futures and global markets are sharply lower as the U.S./China trade war intensified over the weekend.
China allowed the yuan to weaken below the psychologically important level of 7/dollar on Monday, signaling a likely acceptance of a long U.S./China trade war.
Economically, global July composite PMIs were better than feared and generally in-line with expectations, while the British services PMI easily beat estimates (51.4 vs. (E) 50.2).
Today, the key report is the ISM Non-Manufacturing PMI (E: 55.5) and the market will be looking for solid data.
Regarding U.S./China trade, undoubtedly there will be tweets flying today but there is a chance for some good news on U.S./China trade this week. The Commerce Department may grant waivers for U.S. companies to do business with Huawei, and if that happens, it’ll help offset some of this recent trade escalation.
What’s in Today’s Report:
Futures are modestly lower following a steep global sell-off as markets digest Thursday’s tariff threat and the “less dovish than hoped for” Fed, ahead of the jobs report.
Chinese authorities threated retaliation should the tariffs go into effect on September 1st, further escalating trade tensions, although no specifics were given.
Economically, Euro Zone retail sales beat estimates, although revisions were negative so it wasn’t a strong beat.
Today the big event is the Employment Situation Report, and expectations are as follows: Jobs: 156K, UE Rate: 3.6%, Wages: 0.2%). The last thing this market needs at this point is a “Too Hot” number that reduces expected Fed rate cuts, or a “Too Cold” number that increases worries about economic growth. So, from a stock standpoint, the best case in a jobs number between 150k-200k (the higher the better) with tame wage growth and stable unemployment. If we get that “Goldilocks” number it’ll help markets stabilize.
The seven-week stretch of falling crude supplies is the longest since the 10-week decline from the week ended Nov. 17, 2017 to Jan. 19, 2018, according to an analysis of EIA data provided Sevens Report Research. Click here to read the full MarketWatch article.
