As the North American session begins, the CHFis the strongest and the AUD is the weakest. The USD is mixed/little changed as President Joe Biden and House Speaker Kevin McCarthy prepare to hold talks on the debt ceiling (3 PM ET), with the estimated deadline to lift the $31.4 trillion borrowing limit approaching. The main indices which ended the previous session in the green, on positive comments from Biden about the progress of negotiations with Congress, are trading lower on the anxiety for the meetings ahead. Both the Democrats and Republicans are currently at odds over spending proposals, and while the White House hasn't completely rejected a Republican demand for a cap on expenditures, the details remain to be solved.
The overnight economic data out of China painted a somewhat troubling picture (and helped to put pressure on the AUD), indicating a slowing down of its economic recovery. Despite expectations of a 5.7% increase, Fixed Asset Investment year-to-date/year-on-year only grew by 4.7%, falling short of the previous figure of 5.1%. Similarly, Industrial Production year-on-year came in at 5.6%, well below the expected 10.9% and only slightly above the prior result of 3.9%. In addition, Retail Sales year-on-year, although expanding at an impressive 18.4%, failed to meet the anticipated 22.0% growth, but still surpassed the previous rate of 10.6%. On the brighter side, the Unemployment Rate marginally improved to 5.2%, compared to the expected and prior figure of 5.3%. These numbers, overall, suggest that the Chinese economy's initial post-COVID recovery may be losing steam, inciting concern among traders.
In Europe today the UK employment data, released today, reveals a weaker labor market. The Claimant Count Change, indicating unemployment claims, rose to 46.7K, higher than the expected 31.2K, signaling increased joblessness. The Unemployment Rate rose to 3.9%, slightly above the forecasted 3.8% and above last months 3.8% rate. The Average Earnings Index, representing wage growth, remained constant at 5.8%, indicating sustained wage growth despite the rise in jobless claims.
ZEW Economic Sentiment for both Germany and the Eurozone reflected a pessimistic outlook, with Germany's figure at -10.7, falling from the previous 4.1, and the Eurozone's figure at -9.4, a drop from the previous 6.4. However, the Eurozone's quarterly Flash Employment Change outperformed expectations at 0.6%, suggesting a slightly improved job market (est 0.4%).
HomeDepot earnings came in mixed with EPS beating at $3.82 versus $3.80 expected, but revenues fell short of expectations at $37.25 billion versus $38.28 billion expected. Home Depot shares are trading at $281.85 down from $288.54 at the close.
There is a full slate of central-bank speakers today:
- Feds Mester. is scheduled to speak shortly
- Feds Barr speaks at 10 AM ET
- ECBs Lagarde also speaks at 10 AM ET
- Feds Williams is scheduled to speak at 1215 PM ET
- Feds Goolsbee will speak at 2:30 PM ET (and again at 7 PM ET)
Canada CPI data will be released at 8:30 AM along with US retail sales which are expected to rise by 0.8% versus -1.0% last month. The core data is expected to rise by 0.5%. Note that Bank of America credit card spending data was lower. US industrial production capacity utilization will be released at 9:15 AM
Oil prices are marginally lower in early trading lower in early trading. US yields are also a little bit lower.
A snapshot of the market currently shows:
- Gold is trading down $10 or -0.50% at $2005.30
- Silver is down $0.24 or -1.02% at $23.82
- Crude oil is down $0.10 or -0.11% $71.02. The low reached $70.54. The high was at $71.79
- Bitcoin is trading just above the $27,000 level. The current price is trading at $27,050
in the premarket for US stocks the major indices have moved into the red as Home Depot shares a slump:
- Dow industrial average is down -94.6 points industrial average. Yesterday it snapped its 5 day losing streak with a gain of 47.98 point
- S&P index is trading down -7 points after gaining 12.2 points yesterday
- NASDAQ index is down -4 points after a 80.47 point rise yesterday
in the European equity markets, the major indices are mixed/little changed:
- German DAX +0.15%
- Frances CAC unchanged
- UK's FTSE 100 unchanged
- Spain's Ibex +0.21%
- Italy's FTSE MIB +0.10%
In the US debt market, yields are marginally lower across the curve:
- 2 year yield 3.993% -1.0 basis points
- 5 year yield 3.447% -2.1 basis points
- 10 year yield 3.490% -1.7 basis points
- 30 year yield 3.840% -0.2 basis points
In the European debt market, the benchmark yields are lower in the 10 year sector:
