Italy-Spain All good in Europe….

…But not so good in USA as weekly Jobless claims starting to turn back higher..This is why a new stimulus package is needed

Italy-Spain All good in Europe….
…But not so good in USA as weekly Jobless claims starting to turn back higher..This is why a new stimulus package is needed
It Continues:
US STATE DEPARTMENT: HOUSTON WAS EPICENTRE OF CHINA RESEARCH THEFT || CHINA STOLE AT LEAST $1B OF RESEARCH
This morning — Senate Majority Leader MITCH MCCONNELL plans to unveil his coronavirus relief bill, and the Senate GOP leadership anticipates it will have the White House’s support. REMEMBER: MCCONNELL views this bill as a GOP marker for negotiations. (Politico….) Republican are not unified on anything right now .
…further THERE’S REAL IMPACT if Democrats catch a whiff of any disagreement among Republicans. If the White House and Senate Republicans are not on the same page, it strengthens the Dems’ hands. And we have seen the administration roll Republicans a few times already. (politico)…. Passage of any Bill By next Friday is in serious doubt
… A pair of cafeterias regularly used by White House staff members were reportedly closed this week after an employee tested positive for COVID-19, the disease caused by the novel coronavirus. (The Hill)
Earnings:
Markets:
European Auto Sector upgraded by Citi thus pushing autos to hefty gains, as sector +2.8% Renault +7%, Daimler +5.5 also Solid earnings from Unilver providing a lift for European stocks .European Bourse trading slightly in the green. The red-hot White metals market taking a breather today Silver, Platinum, and palladium all down >1% Gold +.6% narrow range in Dollar index, Euro traded up to 1.1598 in the spot assuise a touch lower. 10-year BTP yields below 1% 202 lows are .9% have not talked China Much but PBOC a bit aggressive in its Yuan Fix lower vs yesterdays fix Aussie dollar giving back some of this weeks hefty gains
News:
Markets adrift so far this morning Weekly jobless claims were bad missed expectations the trend lower has stopped. Dollar rallying a bit on the bad news Higher dollar =Risk off, let us see what Silver and gold do here
Another benefit of the EU Stimulus deal is the continuing narrowing of sovereign spread to bund ,below are Spain , Italy and France charts
Major news overnight…..@StateDept: US orders the closure of China’s Consulate in Houston to “protect American intellectual property” & “private information.” US accuses Beijing of interfering in politics, stealing intellectual property, coercing biz leaders & threatening families of Chinese Americans…….A bit of Risk off when news hit wires we know China will retaliate per pro farmer “The latest U.S. move marked “a political provocation unilaterally launched by the U.S.,” Chinese Foreign Ministry spokesman Wang Wenbin said today at a routine briefing in Beijing. “China urges the U.S. to immediately rescind its erroneous decision, otherwise China will undertake legitimate and necessary responses.”
The continuing story of the Weaker dollar is driving flows, DXY below 95 handle and has 94.65 the March lows on the radar. Real rates aa sub story to weaker dollar continue to drop thus putting a bid into hard asset. Silver ~+17.5% this week, Platinum ~10%, Gold up a modest 3.3%…Aussie Dollar +~3% from Mondays lows one of the Commodity currency benefitting from Weaker dollar and run up in metals
Excitement surrounding the EU stimulus deal continues for a second day Euro testing 1.16 handle +1.6% from Mondays lows, European Stocks will tell us when the Euro is to high to impact Exports currently not a problem. Italian yields Continue to move lower and the spread to bunds tighter…..treasury yields lower to sideways as they have been for a weeks Spoos 20 handles off lows, Nasdaq 100 handles, Russel trading a bit lower had your chance to buy Spoos on dip overnight. Republicans struggling to speak with one voice regarding new stimulus deal early days but monitor situation
Early results from second-quarter earnings season have been coming in better than feared… Analysts’ consensus going in was for S&P 500 earnings per share to tumble by 44% from a year ago, on a 12% drop in revenues. The actual results so far, according to data from FactSet, show just over 80% of S&P 500 companies that have already reported second-quarter results have surpassed Wall Street’s estimates.-pro farmer
What a day for the Aussie dollar +1.8% vs USD +1.3% vs JPY and +1.7% vs Yuan
Some lingering question regarding the bund and why it hasn’t sold off due to EU deal? Hmm well ECB still doing QE and whatever acronym program they are embarking on is still buying bunds. EU countries not out of the water with regards to recession and thus individual countries can still be downgraded.lastly Spread tightness might be representative of EU Success more so then outright move in Bunds. Just a few thoughts Once I read some more insight ,clarity will ensue.
Weaker Dollar along with real yields continuing to drop, 10 year real yields -.9% 5 year Real yields -1.15% both down over 3.5% on day and trending lower=increase demand for hard assets .
March lows on the Radar for DXY
many people talking about yesterdays random walk in markets a term that pops up more frequently to explain daily movements this summer. From Rosenberg research …”The S&P 500 rallied 0.8% and, yet, only 3 of the 8 sectors were in the green! The median sector was actually DOWN 1.0%. And financials lost 0.4%, as did the Russell 2000, and the cyclically-sensitive transports were crushed 1.6%. Not to mention the fact that 20 of the Dow stocks closed in the red; strip out Microsoft, and the index fell 50 points as opposed to rising 9 points; then also strip out Apple and the Dow lost more than 100 points. A run-up in the major averages devoid of any semblance of cyclicality. The yield on the 10-year T-note dipped 1 basis point,to 0.61%. The CRB metals index was flat
![]() Being most sought out over the past several weeks are real yields otherwise known as TIPS. Indeed, since the beginning of June 10-year TIPS have seen their yields decline by roughly 37 bps (with 20 bps of the decline occurring this month) as the 10-year nominal yield declined by roughly 5 bps (from 0.66% to 0.61%) pushing out the break-even spread roughly 32 bps to -147 bps last. Much of the improvement and outperformance in TIPS is seen as due to the complex making up ground lost in the early-to-mid March debacle when financial markets unraveled as Covid-19 washed onto US shores. In early March the 10-year TIPS B/E spread was at -147 bps only to collapse to -50 bps by March 19 to now return back to where it was in early March. Helping to make up this lost ground was/is the Fed’s large scale purchases that have an outsized effect supporting the more illiquid and lightly supplied TIPS complex. The favoritism for TIPS is now extending into fundamental realm where the weakening dollar and the surge in precious metals and other hard assets is having investors favor the sector for their inflation protection attributes. As well, from a relative value perspective versus nominals they still appear as appealing from a total return basis. Even so, and as TIPS/real yields trend lower they are helping to underpin nominal yields as well. Rather than any connection to equities the current situation remains that of favoring the buying of dips in near all markets. Refinitiv Global Markets, Inc. is a Registered Investment Adviser. Refinitiv Global Markets disclosure statement is available on the web at https://www.ifre.com © 2020 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv or Refinitiv Global Markets content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv or Refinitiv Global Markets. Refinitiv and the Refinitiv logo are trademarks of Refinitiv and its affiliated companies. Support: ifr.clientsupport@refinitiv.com ![]() |
European Bourses are trading higher 18-19 Stoxx 600 sectors higher led by banks, Autos and retail European bond yields little changed. Politico: EU leaders agree on a recovery fund made up of €390b in grants & €360b of loans attached to a new €1.075T seven year MFF, total package is worth €1.82T https://politi.co/32Kii0p
Dollar index DXY traded below important area of 95.71 Gold on the bid +1% Silver on the bid as well +5.7%!! traded above psychological $20 yesterday now above $21!! Aussies Dollar +1%,Krone +.7%,peso +.61% Weaker dollar=Risk On
All about Stimulus and Vaccine headlines, doesn’t really matter if there isn’t much truth or facts behind them this is what the market wants to hear and will run with any Slightly positive headline from Politico”
While top Trump administration officials publicly suggested Monday that the tax cut would be included in the GOP’s plan, Senate Republicans are expressing deep reservations. … Senate Majority Leader Mitch McConnell (R-Ky.) hasn’t tipped his hand in private on whether the payroll tax cut will be included in the GOP proposal. … Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows are expected to attend the Senate GOP lunch Tuesday.”
Weaker dollar the New normal? With European Deal now signed and the member states working with one voice things look a bit better for Europe and the euro compared to the chaos here in the USA???
News:
JPM Global FX volatility index,60 min chart,July the Month of low Voaltility
Nasdaq back to leadership role AMZN +6% Tesla +8%,MSFT +3% ,NDX +2%Russell down on day.RTY/NDX -2.5% after a few days of gains and Obituaries of NDX
markets:
NG -4.4% Corn -1% Wheat -2.5%
SPX gap in play above 3260 ish
Chart Via Bloomberg
Below chart from http://www.moovit.com ,Daily public transportation ridership for Chicago and Houston ( Chicago =orange line)
Silver futures >$20 first time in 4 years Cash market has yet to break that level.Real rates negative forever and demand for hard assets only going to increase,below spot silver
Gold/Silver ratio more room for Gold to Run???
Precious metals doing fine but not so for base /industrial metals ,below is CRB rind (spot prices) industrial metals/Gold ratio near multi year lows
3mo-10 year yield spread not pricing in anything except complacency?