Why the Falling Yuan Isn’t That Big of a Threat

What’s in Today’s Report:

  • Why The Falling Yuan Isn’t That Big of a Threat

Futures are solidly higher thanks to continued momentum following Thursday’s positive close.

Stocks were short term oversold and due for a bounce, but if there’s a “reason” behind the early rally it was a Washington Post article stating the Trump administration is getting concerned about future economic growth, which might lead to a trade deal.

There were no notable economic reports overnight.

Today the calendar is more quiet as we only have two economic reports, Housing Starts (E: 1.260M) and Consumer Sentiment (E: 97.5).  But, the Huawei waiver deadline is Monday the 19th so if there are going to be waivers given, it could happen literally at any minute (generous waivers will supercharge today’s early rally if they come).

Tom Essaye was Quoted in UPI on August 5, 2019

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.


Chinese soldiers march past the People's Bank of China

Why the Falling Yuan is Causing a Selloff

What’s in Today’s Report:

  • Why the Falling Yuan is Causing a Selloff
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

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.