North American News
Stocks close the day with mixed results (just like it opened)
- Dow higher. S&P near unchanged. NASDAQ higher
The major US stock indices are ending the day with mixed results. The Dow fell modestly. The S&P is near unchanged. And the NASDAQ index is higher modestly. The NASDAQ rose for the 2nd consecutive day.
- Consumer discretionary’s and information technology moved higher
- energy and consumer staples were the worst performers
The final numbers are showing:
- Dow industrial average fell -85.31 point -0.26% at 32727.20
- S&P index fell -3.17 points at -0.08% 4152.01
- NASDAQ index rose 52.43 points or 0.41% at 127 to 0.59
- Russell 2000 fell -2.472 points or -0.13% at 1906.45
For the Dow 30, the biggest gainers were:
- 3M +3.24%
- Visa +2.3%
- American Express +0.93%
- Salesforce, +0.9%
- Caterpillar +0.54%
The big losers from the Dow 30 included:
- Walmart, -3.72%
- Chevron, -2.73%
- Verizon, -1.96%
- J&J -1.61%
- Intel, -1.37%
Atlanta Fed GDPNow estimate for 3Q growth 1.4% vs 1.3% last
- Small rise after recent data
After today’s international trade numbers in the US and yesterday’s Auto sales, ISM, M3 , and manufacturing data, the GDPNow estimate for 3Q growth in the US was revised marginally higher to 1.4% from 1.3% on August 1.
The data from yesterday ticked the rate to 1.7% but the international trade data today, lowered the gain to 1.4%. Below are the details of the models changes.
Commodities
Gold bulls commit to the task of the 61.8% golden ratio
- Gold bulls have taken charge in the build-up to the NFP showdown.
- Bulls are eyeing a deeper correction towards the golden 61.8% ratio.
The gold price surged on Thursday as the US bond yields fell and the Bank of England warned the United Kingdom’s economy could be headed for a recession later this year with inflation rising as high as 13%. XAU/USD has pushed don within its weekly bullish correction to mark a high of $1,794.23. Gold for December delivery was printing above $1,800 per ounce.
Gold has been benefitting from softer US bond yields, bullish for gold since it offers no yield. The US 10-year note was last seen paying 2.699%, down 0.26% on the day. The US dollar was lower vs. most major currencies on Thursday, down some 0.5% at the time of writing as per the DXY to 105.81. The positive impact of hawkish Federal Reserve comments faded this week while investors waited for more signs on the data front. Friday’s Nonfarm Payrolls and next week’s inflation data will be critical.
The Fed hiked rates by 75 basis points at its meeting in June and July. For now, the money markets are pricing in a 50 basis point hike at the Fed’s September meeting, and a roughly 44% chance of another massive 75 bps increase. Today, Loretta J. Mester, president of the Federal Reserve Bank of Cleveland said on Thursday that the Fed should raise interest rates to above 4% in order to bring inflation back down to target.
“I would pencil in going a bit above four as appropriate,” Mester told reporters following an event held at the Economic Club of Pittsburgh, in reference to the central bank’s policy rate. “It’s not unreasonable I think to maintain that as where we’re getting to and then we’ll see.”
- ”We will need to raise interest rates and then hold them there for a while.
- Then we’ll bring them back down once inflation gets back closer to our 2% goal.”
Analysts at TD Securities explained that ”while Fedspeak has pushed back against the market’s dovish interpretation of the FOMC, and yesterday’s data surprised to the upside, seeing rates and pricing of the September hike increase, the gold market is thus far trading with a mind of its own.”
”CTA triggers for additional short covering are coming well within reach. Indeed, we estimate prices closing above $1789/oz would catalyze enough of a shift in momentum to see trend followers target a roughly flat net position,” the analysts added. ”However, with nonfarm payrolls headlining the week tomorrow, our expectations of a stronger-than-anticipated report could quickly put a cap on the prevailing bullishness among gold bugs.”
The monthly US Nonfarm payrolls report will be closely watched on Friday after data early Thursday showed a tick up in jobless claims.
- Ready for trading the NFP?
”A strong payroll print should help drive a further rebound in the market’s pricing in terminal rate pricing. This should pressure front-end rates higher, and continue to flatten the 2s10s curve. We remain short Jan 2023 Fed funds futures to position for Fed rate hikes,” the analysts at TD Securities said.
WTI crude oil settles at the lowest since February 2. What’s next
- Crude down $2.12 to $88.54
The market certainly isn’t convinced that the data is bad because crude was down another $2.12 to $88.54 per barrel today. That’s the lowest since Feb 2. The year opened at $78 so oil is now only up $10 year-to-date.
Natural gas is a different story with huge gains this year. Today, weekly inventories rose 41 bcf compared to 29 bcf expected. That briefly sparked a larger selloff but it was most recently down just 8 cents to $8.18.
EU News
European equity close: The gains continue but finish well below the highs
- Closing changes for the main European bourses
Closing changes in Europe:
- Stoxx 600 +0.1%
- FTSE 100 +0.1%
- German DAX +0.5%
- French CAC +0.6%
- Italy MIB +0.1%
- Spain IBEX +1.0%
Other News
Fed’s Mester: I would pencil in going a bit above 4% in Fed funds
- Business contacts tell me not looking for as many workers as before
- But these are only nascent signs, labor market still quite strong
- Need to see several months of monthly changes moving down on inflation
- We will need to raise rates and then hold them there for awhile
- We’ll bring rates back down once inflation gets closer to our 2% goal
Cryptocurrency News
Bitcoin slips back under $23K – cryptocurrency thefts weighing
Media reports have continued, dragging up other heists. Blockchain bridges, the infrastructure that allows users to exchange assets between different blockchains, have become a focus of attacks.
BTC/USD update, nearly back to its lows from earlier this month/week