Market movers today
- In the US, the empire manufacturing index will likely show a moderation in the momentum of the manufacturing sector from waning external demand.
- The key focus this week is Fed Chair Powell’s speech and US retail sales tomorrow, Fed minutes from the July meeting on Wednesday, which also brings euro area core inflation for July.
The 60 second overview
Japan: The Japanese economy expanded at a faster pace than expected in Q2. GDP rose 1.3% q/q vs. the consensus expectation of 0.5% q/q. Both private consumption and business spending contributed to a rise in demand.
China: Growth in industrial production fell to 6.4% y/y in July, which was slower than in June and below the consensus expectation.
US: US consumer confidence measured in the survey from University of Michigan dropped sharply in August reflecting both a drop in sentiment around current conditions and the future. Consumer inflation expectations remain elevated.
Equities: Friday completed a week with five consecutive days of rising equities. Despite this catchy headline, the accumulated gain less than 1% and defensives outperformed cyclicals. Several soft indicators have started to fade which typically leads to a more challenging environment for equities. However, the small move higher on Friday secured a new all-time high in many indices not least in the US. Dow +0.1%, S&P 500 +0.2%, Nasdaq +0.04% and Russell 2000 -0.9%.
Asian markets are mostly lower this morning led by Japan falling almost 2%. The Delta variant keeps spreading in Japan and Chinese data this morning are on the weak side. Both European and US futures signalling a lower start to the week.
FI: US government bond yields declined Friday afternoon after weaker than expected consumer data on the back of rising infections and the expected negative impact on the US economy. The decline in US Treasury yields continued in Asian trading this morning and 10Y Treasury yields have declined some 10bp since Thursday. Hence, there will be focus on US data this week such as the retail sales and the minutes from the latest FOMC meeting.
FX: EUR/USD rose back to 1.18 on Friday after consumer confidence disappointed. EUR/SEK traded below 10.20 and EUR/NOK briefly touched 10.36.
Credit: Credit markets barely moved on Friday, with iTraxx Xover tightening 0.4bp and Main 0.2bp. Both IG and HY bonds were unchanged.
