Daily Morning Report

Thursday, August 1–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mixed to weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and Fed Chairman Powell press conference. The FOMC cut its main interest rate, the “fed funds rate” by 0.25%, to a range of 2% to 2.25%, as expected. A few did look for a bigger 0.5% rate cut. This was the first rate decrease by the Federal Reserve in 11 years. The FOMC statement said the rate cut was enacted due to very low inflation pressures and concerns about global economic growth. While the FOMC statement suggested the door is opened to more interest rate reductions in the months ahead, Powell took the marketplace aback when he said the Fed is not planning a long series of U.S. interest rate reductions. He added that this week’s interest rate cut was a “mid-cycle” adjustment. That spooked the stock and financial markets and U.S. stock indexes sold off. The U.S. dollar index rallied solidly to a new high for the year and is seeing follow-through upside today.

Gold prices are sharply lower and U.S. Treasuries are also weaker Thursday on the apparent less-easy lean on monetary policy from the Federal Reserve.

Traders are now awaiting Friday’s U.S. employment situation report for July, arguably the most important monthly report for the U.S. economy. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

The other key “outside market” today sees Nymex crude oil prices lower and trading just below $58.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. manufacturing PMI, the ISM manufacturing report on business, the global manufacturing PMI, domestic auto sales, and construction spending.

–Jim

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Wednesday, July 31–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were steady to weaker overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Global equities traders and investors have been taken back a bit this week by the apparent setback in the U.S.-China trade negotiations, which resumed at a high level this week in Shanghai.

The Euro zone gross domestic product in the second quarter was released today and came in at up 0.2% from the first quarter and up 1.1%, year-on-year. Those numbers were about in line with market expectations.

In other overnight news, Germany auctioned its 10-year bond (bund) for a record low average yield of -0.41%. The results reflect two important factors: still-very-low inflation in the major economies of the world, and European investors’ worries about the health of the European Union economy.

The main economic event of the week concludes Wednesday afternoon when the Federal Reserve’s Open Market Committee (FOMC) issues its statement on U.S. monetary policy. The Fed is expected to lower interest rates. Most market watchers think a 0.25% interest rate reduction is in the cards, but a few do look for a bigger 0.5% rate cut.

On Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

The key “outside markets” today see Nymex crude oil prices higher and trading around $58.50 a barrel. The U.S. dollar index is slightly up and not too far below the new high for the year hit on Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the employment cost index, the Treasury quarterly refunding announcement, the ISM Chicago business survey, and the DOE liquid energy stocks report.

–Jim

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The U.S. stock index futures last week hit record highs as their steady, unassuming, low-volatility price uptrends continue. This type of market action is just what the stock market bulls should want to see continue, as it suggests more of the same in the cards for at least the near term. Stay tuned!–Jim

Tuesday, July 30–Jim Wyckoff’s Morning Markets Report

Asian stocks were mostly firmer and European stocks were mostly weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.

A feature in overnight trading was a further decline in the British pound, as the currency fell to a nearly 2.5-year low on worries about a “hard Brexit.” New Prime Minister Boris Johnson is seen as more hard-line on U.K. negotiations with the European Union.

The World Gold Council reported emerging central banks are purchasing gold at a faster pace this summer. Lower government bond yields are attracting more buying interest in the yellow metal.

The main economic event of the week begins on Tuesday when the Federal Reserve’s Open Market Committee (FOMC) meets to determine monetary policy. The Fed is expected to lower interest rates at the conclusion of the meeting Wednesday afternoon.

Then on Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

Also in focus this week is U.S.-China trade talks that have resumed at a high level. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today. Expectations are low key for any significant breakthroughs.

The key “outside markets” today see Nymex crude oil prices higher and trading around $57.50 a barrel. The U.S. dollar index is slightly up and today hit another new high for the year overnight.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, personal income and outlays, pending home sales, the consumer confidence index and the S&P Corelogic home price index.

–Jim

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Monday, July 29–Jim Wyckoff’s Morning Markets Report

Asian and European stocks mixed to firmer overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session beings.

Markets are quieter heading into a busy data week in the U.S. On Tuesday the Federal Reserve’s Open Market Committee (FOMC) meets to determine monetary policy. The Fed is expected to raise interest rates at the conclusion of the meeting Wednesday afternoon. Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

Also in focus this week is U.S.-China trade talks that are resuming at a high level. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today.

The key “outside markets” today see Nymex crude oil prices near steady and trading around $56.25 a barrel. The U.S. dollar index is slightly up and did poke to a new high for the year overnight.

U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.

–Jim

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The Euro currency is one of the most popularly traded futures markets in the world. See on the daily bar chart for the December Euro currency that prices are in a downtrend and have just hit a 16-month low. The bears are in solid technical control and more downside pressure is likely in the near term. Price trends in the currency markets tend to be stronger and longer-lasting than price trends in other markets. Stay tuned!–Jim