Daily Comments

After a strong week, Asian markets settled mostly lower. The Nikkei 225 fell -0.22% and the Shanghai Composite dipped -0.21%. The ECB published the Survey of Professional Forecasters which said that “the balance of risks to longer-term expectations remains to the downside.” The rising euro seemed to weigh on European equities. The DAX fell -1.66%. Yields on the 10-yr. Bund sank to 0.503%. The only “economic report” out today was from Baker Hughes. They reported that the U.S. oil rig count fell by 1 to 764. Yields on the 10-Year Note continue to drift lower, now at 2.236%. The US$ Index also kept falling. With a weaker US$, August gold moved higher, adding -0.8% to $1,254.90. September crude gave back all the gains of the week and more, closing down -2.5% to $45.77. A Reuters report suggests OPEC output will rise by 145K bpd in July. Note that beginning today we are following the September crude contract. It was a low volume day. None of the major averages managed to reach new highs, but all are very close. While markets felt “heavy” most of the day, in the final hour, some of the losses were erased and markets closed only modestly lower.

The Japan June trade surplus was smaller than expected as both imports and exports rose. Asian markets followed the U.S. higher. The Nikkei 225 rose +0.62% while the Shanghai Composite added +0.44%. Despite a dovish tone from the ECB, European equities reversed early gains to close mostly lower. The DAX finished down -0.04%. Yields on the 10-yr. Bund also edged lower as well, to 0.535%. Initial Claims for the week of 07/14 dipped to 233K. The July Philadelphia Fed slowed, coming in at the low end of expectations at 19.5. June Leading Indicators beat expectations, rising +0.6%, and that off an upward revision for May. Yields on the 10-Year Note fell to 2.261%. The US$ Index continued trending lower at its lowest levels in 10 months. August gold, which began the day weaker, reversed to close up, +0.X% at $1,2XX.XX. August crude reversed and expired lower, down -0.7% at $46.79. Tomorrow we’ll begin tracking September crude. It was another day of very low volume and low volatility. Still, the S&P 500, DJIA, and Russell 2000 all posted new contract highs and the Nasdaq 100 had it’s 10th straight winning session.

Asian markets were higher. The Nikkei 225 rose +0.10%. The Shanghai Composite had a strong day on potential merger activity between two of its biggest state-run metals companies, adding +1.42%. Ahead of tomorrow’s ECB meeting, and on the strength of U.S. earnings, European equities managed solid gains. The DAX rose +0.17%. Yields on the 10-yr. Bund have continued to move lower, and are now at 0.538%. June Housing Starts at 1.215M and June Building Permits at 1.254M both beat expectations. Last night, the API reported a build in crude inventories of +5.4M barrels, but this morning, the EIA reported a draw of -4.7M barrels instead. Yields on the 10-Year Note were flat, closing at 2.268%, and the US$ Index edged off recent lows. August gold added $.10 to settle at $1,242.00. Lower inventory numbers sent August crude up +1.6% to $47.12. Despite low volume, the S&P 500, Nasdaq 100, and the Russell 2000 all reached new all-time highs. After a quick start, equities simply ground steadily higher as the day progressed. At the close, markets were solidly higher.