Daily Comments

The China yuan slid to an 11-month low on continued trade fears. Asian markets settled mixed. The Nikkei 225 climbed +0.43% while the Shanghai Composite lost -0.35%. Eurozone June core CPI was revised lower, to +0.9% y/y. European equities closed higher. The DAX climbed +0.82%. Yields on 10-yr. Bunds eased slightly to 0.342%. June Housing Starts at 1.173M and Building Permits at 1.273M wee well below expectations. Last night’s API report on crude inventories for 07/13 showed a surprise build of 629K barrels. This morning’s EIA report showed an even bigger build of 5.8M barrels. The Fed’s Beige Book for June found modest or faster growth in 11 of 12 districts. Yields on 10-Year Notes edged up to 2.878%. The US$ Index is close to highs for the year. August gold rose less than +0.1% to $1,227.90. Despite the build, August crude reversed early losses to close up +1.0% at $68.76. Equities traded in a tight range on very light volume. Strength in large-cap industrials was offset by weakness in large-cap technologies. The overall bias was to the upside, and markets closed narrowly mixed.

China June new home prices were higher. Asian markets settled mostly lower. The Nikkei 225 climbed +0.44% on strength in automakers while the Shanghai Composite lost -0.55% on continued trade fears. European June new car registrations were solidly higher. After some early weakness, European equities finished strong. The DAX was up +0.80%. After yesterday’s big rally, yields on 10-yr. Bunds fell back to 0.348%. June Industrial Production rose +0.6% and Capacity Utilization climbed to 78.0%, both in line with expectations. The July NAHB Housing Market Index matched expectations at 68. Yields on 10-Year Notes edged up to 2.864%. The US$ Index rallied back near the highs for the year. August gold tumbled again, losing -1.0% to $1,227.30. August crude reversed early losses to close up +$0.02 to $68.08. U.S. equities got off to a weak start following concerns about tech, but they soon shook off those concerns, with the tech-heavy Nasdaq 100 powering to new all-time highs. Volumes were still light, but markets remained elevated throughout the day. Averages finished moderately higher, holding earlier gains.

China June retail sales rose more than expected but industrial production rose less than expected. China Q2 GDP grew +6.7% as expected. Asian markets settled mostly lower. The Shanghai Composite fell -0.61%. The Nikkei 225 was closed for a holiday. European equities finished mixed. The DAX managed to add +0.16%. Yields on 10-yr. Bunds moved up smartly to 0.363%. May Business Inventories rose +0.4%. June Retail Sales (+0.5%, ex-transportation +0.4%) were in line with expectations, but followed a large May upward revision. The July Empire State Manufacturing Survey fell to 22.6, but that was still above expectations. Yields on 10-Year Notes were higher, closing at 2.855%. The US$ Index was soft. August gold slipped another -0.1% to $1,239.70. August crude, suddenly worried about the demand side, fell again, losing -4.2% to $68.06 Equities began the day looking to add to recent gains, but quickly settled into a narrow range around unchanged. Small-caps were the relatively weak sector and volume was light. Averages finished mostly lower when Netflix disappointed after the bell.