Daily Morning Report

Monday, October 8–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight, with steep losses seen in the Chinese stock market after it was closed last week for a public holiday. Chinese monetary officials during the weekend loosened monetary policy a bit more but that did not stop their stock market sell off.

World equities are still pressured by rising government bond yields that are pulling investor interest away from stocks. U.S. stock indexes are in very mature bull market runs that have many wondering if the end is near. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The U.S. government, including the Treasury bond cash market, is closed for the Columbus Day holiday today.

Risk-off attitudes to start the trading week are also being perpetuated by the new Italian anti-establishment government not falling into line with European Union rules on a budget.

The key outside markets today find the U.S. dollar index higher, on safe-haven demand. Meantime, November Nymex crude oil prices are lower on profit taking and trading around $73.50 a barrel.

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Friday, October 5–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight, still pressured by rising world government bond yields. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Chinese markets have been closed all week for a public holiday.

Traders are awaiting this morning’s U.S. Labor Department Employment Situation Report for September—arguably the most important U.S. data point of the month. The key non-farm payrolls number is expected to come in up 180,000. However, Wednesday’s U.S. ADP national employment report for September showed a gain of 230,000 jobs, which hints that Friday’s employment report will come in hotter than expected, which if is the case would likely further stoke U.S. bond yields. The U.S. wage-growth figure will also be closely watched, to see if the annual pace moves above 3.0%, as it was 2.9% in the August report.

The U.S. Treasury 10-year note yield rose to a seven-year high above 3.20% this week. Strong U.S. economic data recently is driving U.S. bond and note prices lower.

The key outside markets today find the U.S. dollar index firmer. Meantime, November Nymex crude oil prices are firmer and trading just below $75.00 a barrel.

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A feature in the marketplace late this week is rising U.S. Treasury yields that saw the benchmark 10-year note yield rise to a seven-year high above 3.20% today. Strong U.S. economic data recently is driving U.S. bond and note prices lower. Other world government bond markets are also seeing their yields rise, in sympathy to the U.S. This is yet another clue that creeping price inflation could become problematic down the road. That’s a bullish scenario for hard assets like raw commodities, and bearish for paper assets like stocks and bonds.

Thursday, October 4–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight, pressured by rising world government bond yields and continued strong-greenback pressure on the secondary currency markets. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Chinese markets are still closed this week for a public holiday but will reopen Friday.

A feature in the marketplace late this week is rising U.S. Treasury yields that saw the benchmark 10-year note yield rise to a seven-year high above 3.20% today. Strong U.S. economic data recently is driving U.S. bond and note prices lower. Other world government bond markets are also seeing their yields rise, in sympathy to the U.S. This is yet another clue that creeping price inflation could become problematic down the road. That’s a bullish scenario for hard assets like raw commodities, and bearish for paper assets like stocks and bonds.

Traders are looking ahead to the U.S. Labor Department’s Employment Situation Report for September on Friday morning—arguably the most important U.S. data point of the month. The key non-farm payrolls number is expected to come in up 180,000. Wednesday’s U.S. ADP national employment report for September showed a gain of 230,000 jobs, which hints that Friday’s employment report will come in stronger than expected.

The key outside markets today find the U.S. dollar index firmer and hitting a six-week high overnight, amid rising U.S. government bond yields that are attracting more foreign investors. Meantime, November Nymex crude oil prices are near steady after hitting a four-year high Tuesday. Prices are trading just above $76.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, and manufacturers’ shipments and inventories.

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Wednesday, October 3–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Chinese markets are closed until Friday for a public holiday.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. Reports overnight said Italy is backing down from its hardline stance with the European Union over the matter. The Euro currency today stabilized on the news, after being under selling pressure earlier this week.

In other overnight news, U.S. Federal Reserve Bank of Chicago President Charles Evans said in a speech in London the U.S. economy is humming right along and that the Fed will likely have to put the brakes on the economic growth by continuing to gradually raise interest rates. He added such Fed policy moves are historically normal during stronger economic expansion periods.

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The U.S. dollar index is a basket of six major world currencies stacked up against the greenback. The USDX has surged to a six-week high this week, on safe-haven demand amid worries about Italy’s financial and economic condition, and on the bullish impact on the U.S. economy from the U.S.-Mexico-Canada trade agreement. Now, it appears the USDX will soon challenge the summertime high. Stay tuned!