- US stocks finished mixed and saw two-way price action following the recent bloodbath and as participants digested key data releases including US GDP and Core PCE for Q2 which both printed hotter-than-expected. Nonetheless, there were late headwinds towards the close amid a sell-side imbalance and the Nasdaq underperformed as some of the tech woes lingered with Alphabet (GOOGL) shares extending on losses, particularly after a report that OpenAI is to introduce "SearchGPT".
- USD was mixed against its peers with the DXY ultimately flat on the day following a choppy session and with only brief support seen after US GDP data for Q2 topped forecasts and Core PCE Prices printed firmer-than-expected but notably eased from the prior quarter, while the focus now shifts to the monthly Core PCE Index data for June due on Friday.
- Looking ahead, highlights include Tokyo CPI & Japan Leading Index, Singapore Industrial Production, MAS Policy Statement, Supply from Japan.
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LOOKING AHEAD
- Highlights include Tokyo CPI & Japan Leading Index, Singapore Industrial Production, MAS Policy Statement, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks finished mixed and saw two-way price action following the recent bloodbath and as participants digested key data releases including US GDP and Core PCE for Q2 which both printed hotter-than-expected. Nonetheless, there were late headwinds towards the close amid a sell-side imbalance and the Nasdaq underperformed as some of the tech woes lingered with Alphabet (GOOGL) shares extending on losses, particularly after a report that OpenAI is to introduce "SearchGPT".
- SPX -0.5% at 5,399, NDX -1.1% at 18,831, DJIA +0.2% 39,953, RUT +1.3% at 2,223
- Click here for a detailed summary.
NOTABLE HEADLINES
- US Treasury Secretary Yellen said Q2 GDP data affirms the US is on a path to steady growth and declining inflation but added prices are still too high for many Americans and the administration is working to address cost pressures in housing, healthcare and energy.
- US Treasury Secretary Yellen said they believe in a market-determined exchange rate, reflecting economic fundamentals, while she added that FX intervention should happen only rarely and in situations judged to have undue volatility after consultations. Furthermore, she does not think it is desirable to try to negotiate a global agreement on taxing the super-rich.
- Former President Obama's team reportedly expects an endorsement of Harris soon and noted the two have been in regular touch, according to Reuters citing sources.
- WSJ's Timiraos wrote that "PCE translators had pencilled in 0.18% M/M for June - that could still happen, but April (+0.26%) or May (+0.08%) would have to revise up".
- Former President Trump leads Vice President Harris 48-46% among registered voters, according to a New York Times/Siena College poll while the margin of error is 3.3 points.
DATA RECAP
- US GDP Advance (Q2) 2.8% vs. Exp. 2.0% (Prev. 1.4%)
- US GDP Sales Advance (Q2) 2.0% vs. Exp. 1.9% (Prev. 1.8%)
- US Core PCE Prices Advance (Q2) 2.9% vs. Exp. 2.7% (Prev. 3.7%)
- US Durable Goods (Jun) -6.6% vs. Exp. 0.3% (Prev. 0.1%)
- US Initial Jobless Claims w/e 235.0k vs. Exp. 238.0k (Prev. 243.0k, Rev. 245k)
- US Continued Jobless Claims w/e 1.851M vs. Exp. 1.86M (Prev. 1.867M, Rev. 1.860M)
- US KC Fed Manufacturing (Jul) -12.0 (Prev. -11.0)
- US KC Fed Composite Index (Jul) -13.0 (Prev. -8.0)
FX
- USD was mixed against its peers with the DXY ultimately flat on the day following a choppy session and with only brief support seen after US GDP data for Q2 topped forecasts and Core PCE Prices printed firmer-than-expected but notably eased from the prior quarter, while the focus now shifts to the monthly Core PCE Index data for June due on Friday.
- EUR eked a slight gain against the greenback with trade indecisive, while ECB's Nagel noted they cannot pre-commit on what may happen in September and should be able to cut rates if data stays on course but also stated that they must stay restrictive as long as inflation is not at 2%.
- GBP weakened with GBP/USD sitting around 1.2850 following a brief attempt to reclaim the 1.2900 status.
- JPY pared early strength with USD/JPY retesting the 154.00 level to the upside heading into incoming Tokyo CPI data and next week's key BoJ policy meeting.
FIXED INCOME
- T-notes were higher and the curve flattened with yields off morning lows following a hot Q2 GDP and Core PCE report.
COMMODITIES
- Oil prices strengthened with the energy complex boosted by an early turnaround in risk sentiment.
- Saudi Arabia reportedly turned to Kuwait for fuel oil supply in a rare move to meet summer demand, according to Reuters citing sources.
- Russian Deputy PM Novak expects the JMMC meeting on August 1st to be constructive and OPEC+ partners are satisfied with compensation schedule, while Russia aims to fulfil OPEC+ deal and will compensate for overproduction.
GEOPOLITICAL
MIDDLE EAST
- White House said gaps remain in ceasefire talks but believes they can be closed and it believes they are closer to the ceasefire and hostage deal than ever before, while President Biden will talk to Israeli PM Netanyahu about how to end the Gaza war and there is no change to weapons policy regarding 2000 pound bombs to Israel.
- It is expected that there will be a development in the hostage negotiations after the meeting between US President Biden and Israeli PM Netanyahu, while Netanyahu's office informed the members of the mini-ministerial council that there is progress in the swap deal negotiation, according to Al Jazeera.
- Houthi-affiliated media reports five US-British raids on Hodeidah airport, according to Sky News Arabia.
- Yemen's Houthis said that attacks on Israel will continue and response to Israel's strikes in proximity to Hodeidah will occur.
OTHER
- Russian Defence Ministry said Russian and Chinese military planes conducted a joint patrol close to Alaska and did not violate other countries' airspace.
- Former head of the Russian Security Council Patrushev said Russia thwarted NATO plans to deploy a naval base in the Sea of Azov, according to TASS.
ASIA-PAC
NOTABLE HEADLINES
- China's state planner said it is to lower the threshold for the use of ultra-long special bonds for investing in equipment upgrade projects and is issuing a notice to increase support for equipment upgrades and consumer good trade-ins, while it lifted subsidies for car trade-ins to up to CNY 20k/vehicle and announced the allocation of CNY 300bln in ultra-long-term treasury bonds.
- US Treasury Secretary Yellen said they will keep pressing China to change the economic model that channels too much savings and too many subsidies into manufacturing, creating excess capacity, while US concerns over China's excess capacity and its threats to workers and firms are 'shared by many' at G20 meetings.
- US ambassador to the WTO said it is regrettable that China is raising the Inflation Reduction Act at the WTO and hopes to dissuade them.
- Typhoon Gaemi made landfall in China's Fujian province, according to state media.
- China smartphone shipments rose 10% in Q2, while Apple (AAPL) China sales fell 2% in Q2 and Huawei sales rose 41%, according to Canalys.
EU/UK
NOTABLE HEADLINES
- ECB's Nagel said the "greedy inflation beast is no more" and the ECB is taking a meeting-by-meeting approach, while he added they cannot pre-commit on what may happen in September and should be able to cut rates if data stays on course. Nagel also stated that they must stay restrictive as long as inflation is not at 2% and sees a bumpy road on inflation.
DATA RECAP
- German Ifo Expectations New (Jul) 86.9 vs. Exp. 89.0 (Prev. 89.0)
- German Ifo Business Climate New (Jul) 87 vs. Exp. 88.9 (Prev. 88.6)
- German Ifo Current Conditions New (Jul) 87.1 vs. Exp. 88.5 (Prev. 88.3)
