North American News
US stocks close mixed with the Dow higher. The S&P and NASDAQ marginally lower
- Markets shrug off the stronger than expected jobs report and sharply higher rates
The major stock indices are closing the day with mixed results:
- Dow industrial average rose 76.63 points or 0.23% at 32803.48
- S&P index fell -6.75 points at -0.16% at 4145.18
- NASDAQ index fell -63.02 points at -0.50% at 12657.56
- Russell 2000 gain 15.36 points or 0.81% at 1921.82
The NASDAQ index snapped a two day winning streak. Each of the indices fell 3 days and gain on two day’s to start the trading month.
For the week:
- Dow industrial average fell -0.13%
- S&P index rose 0.36%
- NASDAQ index rose 2.15%
Looking at the Dow 30, the biggest gainers were:
- J.P. Morgan, +3.03%
- Chevron, +1.51%
- Verizon, +1.17%
- Visa, +1.08%
- Caterpillar +0.95%
The biggest losers in the Dow included:
- Disney -1.41%
- Boeing -0.91%
- Cisco -0.82%
- Intel -0.76%
- Salesforce -0.59%
Other big gainers today included a number of the meme stocks:
- bed Bath and beyond +32.68%
- beyond meat +21.89%
- AMC +18.97%
- Lyft +16.62%
- Goodrx, +6.8%
- Game Stop +4.17%
Some big losers today included:
- Celsius, -9.03%
- Tesla -6.63%
- Western Digital -5.65%
- Alibaba, -4.99%
- Robin Hood -4.41%
- Paramount global -4.15%
- Moderna -3.78%
US June consumer credit outstanding +40.15B vs +25.0B expected
- Monthly US consumer credit data
- Prior was +22.35B (revised to $23.79B)
- Revolving +14.8B
- Non-revolving +25.36B
Forward guidance will be back by the end of this year; FX implications – BofA
- Bank of America on central bank policy
Bank of America Global Research discusses its expectations for major central banks policy trajectory.
“Assuming inflation proves indeed to be persistent, we would expect most central banks by the end of this year or early next year to bring some form of forward guidance back. Instead of hiking more, they could commit to keep interest rates high, for as long as it takes to bring inflation back to the target, or close enough. This is very similar to their commitment in the low inflation era, to keep interest rates low until inflation was back to the target,” BofA notes.
Commodities
Gold still down $20 from daily high post-US jobs data
- Gold price extends its gains to three straight weeks, up 0.54%.
- Stellar US jobs data exerts further pressure on the Fed, as next week CPI is eyed.
- US-China tussles add further uncertainty to the global economic outlook.
Gold price remained on the defensive late during the New York session after an early US employment report showed that the Federal Reserve is “right” about pushing back on recession chatter. However, next week’s data, led by the Consumer Price Index (CPI), might signal that probably, Fed tightening is working. Meanwhile, XAUUSD is trading at $1773.33, down by almost 1%.
Before Wall Street opened, the US Bureau of Labor Statistics revealed that the July Nonfarm Payrolls report added 528,000 people to the labor market, crushing estimates of 250,000. Even June’s data was upward revised, from 325,000 to 398,000, while the Unemployment rate continued its downward path from 3.6% to 3.5%.
Regarding wages, namely Average Hourly Earnings, an essential component of the employment report and closely watched by the Fed, rose 0.5% MoM, topping 5.1% annually.
The financial market’s reaction saw the greenback jumping, as the US Dollar Index reached a daily high of around 106.930, while the US 10-year bond yield peaked at 2.869%. Additionally, money market futures expect a 75 bps rate hike for the September meeting, while the yellow metal slashed $35, hitting a daily low at $1764 a troy ounce.
Further, Fed officials crossed wires on Thursday. Loretta Mester, Cleveland’s Fed President, said a 75 bps rate hike for September is “not unreasonable.” Earlier in the week, the St. Louis Fed President James Bullard said he favors front-loading rate hikes, further cementing the case for the FOMC September meeting.
Elsewhere, tensions between the US and China, courtesy of US House Speaker Pelosi’s trip to Taiwan, weighed on the market’s mood. Once Pelosi’s visit finished, China conducted aggressive military drills around Taiwan and announced sanctions against Nancy Pelosi and her family on Friday.
Additionally, China announced it would halt cooperation with the US in some areas, including climate change and defense while sending warships across the Taiwan Strait’s median line.
Therefore, the yellow metal price would likely remain pressured. Unless gold buyers decisively lift the price above $1800, the non-yielding metal would be vulnerable to further selling pressure.
Silver slumps under $20.00 on spectacular US NFP
- Silver price hits a daily low of $19.55 in a knee-jerk reaction to the US employment report.
- The US economy added 528K new jobs, so US bond yield surged, a headwind for precious metals.
- Silver Price Forecast (XAGUSD): Failure to break above $20.40 will keep silver exposed to sellers.
Silver price dives after US labor data crushed expectations, as traders scaled back their bets that a Fed pivot was a done deal while pouring cold water to recession fears. The greenback is rising, with the US Dollar Index, up almost 0.80% at 106.579, while the US 10-year bond yield soars 15 bps, up at 2.834%. Consequently, XAGUSD is trading at $19.91, losing 1.19%.
US and European equities shifted gears, recording losses following the US employment report. US Nonfarm Payrolls for July increased by 528K, topping expectations of just 250K. Furthermore, the prior month’s data was revised upwards to 398K, while the Unemployment Rate tick lower to 3.5%. Financial analysts chatter, put a Fed’s 75 bps rate hike on the table for the September meeting, reinforced by Average Hourly Earnings rising 0.5% MoM while on an annual basis, rose by 5.2%.
Still, the US 2s-10s yield curve inversion is a theme around financial markets desks, further deepening to -0.370%, as the US 2-year bond rate is yielding 3.211%.
In the meantime, Cleveland’s Fed President Loretta Mester spoke on Thursday and stayed hawkish. She said the rate path outlined by June dot plots is “about right,” though it should be taken with a pinch of salt after a great jobs report. She added that a 75 bps for September is “not unreasonable.”
Elsewhere, geopolitical risks keep lingering in investors’ heads. Tensions between the US and China, courtesy of US House Speaker Pelosi’s trip to Taiwan, left some scars and consequences, with China conducting aggressive military drills around Taiwan and announcing sanctions against Nancy Pelosi and her family.
EU News
European equity close: Losses take the shine off a decent week
- Closing changes for the main European bourses
- Stoxx 600 -0.8%
- UK FTSE 100 -0.2%
- German DAX -0.7%
- French CAC -0.8%
- Italy MIB -0.1%
- Spain IBEX +0.2%
On the week:
- Stoxx 600 -0.3%
- UK FTSE 100 +0.5%
- German DAX -0.3%
- French CAC +0.6%
- Italy MIB +1.1%
- Spain IBEX +0.4%
Other News
The focus shifts to next week’s US CPI report
- Inflation is the highlight next week
Yesterday, Cleveland Fed President Loretta Mester said that she wants to see a few months of falling inflation before pausing rate hikes. A big test will come with the July data on Wedesday. That report will set the tone for next week’s trading and is a major risk for the US dollar and equity markets.
The consensus right now is +0.2% m/m and +8.7% y/y. The prior y/y number was a cycle high at an eye-watering 9.1%.
Cryptocurrency News
Every U.S. Crypto Exchange and Binance is being investigated by the SEC
The SEC is the US Securities and Exchange Commission. Forbes reports on comments from a staffer from U.S. Senator Cynthia Lummis’ (R-Wy) office, that every U.S. crypto exchange, more than 40 of them, are in various stages of being investigated.