Daily Morning Report

Monday, August 19–Jim Wyckoff’s Morning Markets Report

Global stock markets were higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Trader and investor attitudes are much more upbeat to start the trading week. There were no major geopolitical developments over the weekend, and it appears the civil unrest in Hong Kong did not escalate, as many had feared.

Upbeat comments about the U.S. economy from President Trump and his economic officials, namely saying there is no recession on the horizon, is also boosting investor confidence.

News over the weekend that China plans to further stimulate its economy with interest rate reforms has combined with news late last week that the European Central Bank plans further monetary policy stimulus in September has brightened the world marketplace.

Safe-haven assets gold and U.S. Treasuries are under selling pressure to start the week. The U.S. Treasury market yield curve is no longer inverted after briefly becoming so last week.

In other overnight news, the Euro zone July consumer price index was reported down 0.5% from June and up 1.0%, year-on-year. It was yet another report coming from a major world economy that shows very low inflation, to the point of likely being problematic.

The key “outside markets” today see Nymex crude oil prices higher and trading around $55.50 a barrel. The U.S. dollar index is modestly higher.

Later this week the annual Jackson Hole, Wyoming Federal Reserve confab that sees central banks of the world attending will be closely monitored by the marketplace.

There is no major U.S. economic data due for release Monday.

–Jim

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Friday, August 16–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Risk appetite is more upbeat to start the last trading day of the week.

The U.S. stock market got a boost in afternoon trading Thursday when reports hit the wires that European Central Bank rate-setting official Olli Rehn said the ECB will be rolling out new economic stimulus measures in September. The U.S. fed funds futures market now shows a 100% chance the Federal Reserve will lower its key interest rate in September. Asian and European stock markets also saw gains Friday due in part to the ECB news.

On the U.S.-China trade war front, President Trump late Thursday said he will be talking to his counterpart, President Xi, “soon.” Trump also made comments that could be construed as both negative and positive regarding progress on resolving the dispute.

The key “outside markets” today see Nymex crude oil prices higher and trading around $55.50 a barrel. The U.S. dollar index is modestly higher.

U.S. economic data due for release Friday includes new residential construction and the University of Michigan consumer sentiment survey.

–Jim

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U.S. Treasury and world government bond yields continue to fall, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%. The bull market run in U.S. Treasury prices, which move in the opposite direction of yields, is likely to continue for at least the near term. That means more contract highs set in U.S. T-Bond and T-Note futures. Stay tuned!–Jim

Thursday, August 15–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed overnight and trying to stabilize from recent selling pressure. U.S. stock indexes are pointed toward lower openings when the New York day session begins, after posting gains when the overnight session began.

Global stock markets were trying to stabilize earlier Thursday and then news hit the wires that China plans to retaliate against the U.S. for the new U.S. trade tariffs, some of which go into effect on September 1. China is demanding the U.S. lift all of its trade tariffs on Chinese products. President Trump tweeted Wednesday evening that China’s “humane” response to the Hong Kong protesters is tied to a trade deal being reached with the U.S. These developments appear to have the U.S.-China trade war taking another step back, regarding an agreement being reached anytime soon. Earlier this week the U.S. pushed back the timeline on some new tariffs being imposed on China, which briefly buoyed world stock markets.

U.S. Treasury and world government bond yields continue to fall, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%.

News reports said China last year curtailed its gold imports by 300 to 500 metric tons, in order to prevent capital from leaving the country in the form of gold purchases amid the weakening Chinese currency, the yuan.

The key “outside markets” today see Nymex crude oil prices lower and the U.S. dollar index modestly down, too.

It’s a very busy day for U.S. economic data Thursday, including the weekly jobless claims report, the Empire State manufacturing survey, the Philadelphia Fed business outlook survey, retail sales, preliminary productivity and costs, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, and Treasury international capital data.

–Jim

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Wednesday, August 14–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mostly higher overnight and European stock markets were mostly lower. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

Asian markets were lifted on an apparent thawing in the U.S.-China trade war. It appears the U.S. “blinked” Tuesday when U.S. trade officials said they are delaying until December some of the tariffs on Chinese imports that were set to go into effect on September 1. Economic data coming out of China Wednesday showed the number-two economy in the world has been significantly damaged by its trade war with the U.S.

The civil unrest in Hong Kong remains in focus among traders and investors worldwide. The Hong Kong airport has fully reopened Wednesday, but protestors are still there. President Trump said Tuesday that U.S. intelligence shows Chinese troops have moved to the border with Hong Kong.

Germany’s gross domestic product contracted by 0.1% in the second quarter from the first quarter and was up a paltry 0.4% year-on-year, it was reported Wednesday. Meantime, the Euro zone GDP growth was 0.2% in the second quarter from the first quarter, and up 1.1%, year-on-year. Those numbers were in line with expectations.

U.S. Treasury and world government bond yields continue to fall. The three-month Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve. However, the yield on the 30-year bond is still above that of the 10-year note. Still, the falling government bond yields, globally, paint a dim picture for the marketplace. The German bund hit another new record-low yield again Wednesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, import and export prices and the weekly DOE liquid energy stocks report.

–Jim

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The U.S. stock indexes have seen a solid sell off turn into a solid rebound and then turn into choppy trading just recently. The bulls and bears are now on a level overall near-term technical playing field. That suggests more sideways and choppy trading in the near term. One thing the stock index bears have working in their favor at present is the heightened geopolitical tensions that are prompting keener risk aversion. Stay tuned!–Jim