- US stocks surged and treasuries bear flattened after Initial Jobless Claims fell by more than expected, helping ease some recent labour market concerns. The equity rally was broad-based as all sectors finished in the green and outperformance was seen in Tech, Communication, Industrials and Health Care with the latter sector buoyed by a stellar report from Eli-Lilly (LLY) which raised its outlook on diabetes and weight loss drugs after a strong quarter for Mounjaro and Zepbound, resulting in a 9.5% jump in its shares.
- USD was underpinned after weekly Initial Jobless Claims data printed lower than expected and eased some concerns surrounding the labour market although the DXY is off its intraday highs after pulling back from resistance around the 103.50 level, while recent Fed rhetoric had little effect on prices.
- Looking ahead, highlights include Japanese Money Supply, Chinese CPI & PPI, Supply from Australia.
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LOOKING AHEAD
- Highlights include Japanese Money Supply, Chinese CPI & PPI, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks surged and treasuries bear flattened after Initial Jobless Claims fell by more than expected, helping ease some recent labour market concerns. The equity rally was broad-based as all sectors finished in the green and outperformance was seen in Tech, Communication, Industrials and Health Care with the latter sector buoyed by a stellar report from Eli-Lilly (LLY) which raised its outlook on diabetes and weight loss drugs after a strong quarter for Mounjaro and Zepbound, resulting in a 9.5% jump in its shares.
- SPX +2.3% at 5,319, NDX +3.1% at 18,414, DJIA +1.8% at 39, 447, RUT +2.4% at 2,084.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Barkin (2024 voter) said what he is hearing from people on the ground in the labour market is that people are cutting back on hiring but not firing, while no hiring and no firing is what they see in the data and from here, it could go either way. Barkin added that for him, the case for lowering rates in July would have been either absolute conviction that the labour market was on the precipice, or if you thought you have inflation under control.
- Fed's Goolsbee (non-voter) said the Fed watches markets but they do not drive policy, while he added they are getting back to more normal conditions in the US economy and the question is if the job market will hold or keep worsening. Furthermore, he said that they need to see more than payrolls and more than one month, as well as noted they need to watch the real economy if they are too tight for too long.
- US Republican Presidential Nominee Trump said the US is close to depression, very close to a world war, and close to a 1929 crash.
DATA RECAP
- US Initial Jobless Claims w/e 233.0k vs. Exp. 240.0k (Prev. 249.0k, Rev. 250k)
- US Continued Jobless Claims w/e 1.875M vs. Exp. 1.87M (Prev. 1.877M, Rev. 1.869M)
- US Wholesale Sales MM (Jun) -0.6% vs. Exp. 0.3% (Prev. 0.4%, Rev. 0.3%)
- US Wholesale Invt(y) MM (Jun) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
FX
- USD was underpinned after weekly Initial Jobless Claims data printed lower than expected and eased some concerns surrounding the labour market although the DXY is off its intraday highs after pulling back from resistance around the 103.50 level, while recent Fed rhetoric had little effect on prices.
- EUR was ultimately flat on the day after recovering from an initial dip beneath the 1.0900 level in the aftermath of the US jobless claims data.
- GBP strengthened and regained a firmer footing at the 1.2700 handle alongside the advances in cyclical counterparts.
- JPY mildly softened which saw USD/JPY return to above the 147.00 level as US yields marginally gained following the US data release.
- Mexican Interest Rate (Aug) 10.75% vs. Exp. 11.0% (Prev. 11.0%); 3-2 vote split. Banxico maintained guidance that the Board foresees the inflationary environment may allow for discussing reference rate adjustments and reiterated that the balance of risks for the trajectory of inflation within the forecast horizon remains biased to the upside.
FIXED INCOME
- T-notes were lower with bear flattening seen after Initial Jobless Claims fell by more than expected which eased some labour market fears, while there was a woeful 30yr bond auction.
COMMODITIES
- Oil prices extended on the prior day's advances in light newsflow owing to the geopolitical risk premium as participants await the imminent Iran/Hezbollah response.
GEOPOLITICAL
MIDDLE EAST
- Rocket barrage was fired from southern Lebanon towards western Galilee, according to Sky News Arabia.
- US reportedly warned Iran its newly-elected government and economy could suffer a devastating blow if it were to mount a major attack against Israel, according to WSJ.
- US CENTCOM Commander General visited Israel to tighten coordination ahead of a possible attack by Hezbollah and Iran, according to Axios.
- Syrian Armed Forces Chief of Staff has secretly visited Tehran to strengthen relations with Iran and approved the launch of attacks on Israel from Syrian soil, according to Al Arabiya citing sources. It was also reported that an IRGC-linked plane landed at the Russian airbase in Syria on Thursday morning, according to N12 News.
- Houthi's leader justified the delay in responding to Israel as tactical and said there is no pressure or intimidation that can dissuade them from the decision to respond to the Israeli enemy.
OTHER
- Russia's Defence Ministry said Russia is thwarting Ukraine's attempts to break through deeper into Russia's Kursk region.
- IAEA said it's monitoring the situation around Russia's Kursk nuclear plant, according to RIA.
ASIA-PAC
NOTABLE HEADLINES
- US banned imports from five more Chinese firms amid human rights abuses involving Uyghurs.
- An earthquake with a revised magnitude of 7.1 hit Japan's southern region and a tsunami warning was issued for Miyazaki, Kochi, Kagoshima and Ehime. It was later reported that Japanese Chief Cabinet Secretary Hayashi said the Japan Meteorological Agency panel saw a 'relatively higher' chance of another major quake occurring near western Japan's Pacific coast.
