Daily Comments

The U.S. agreed to “timely licensing decision” regarding controversial Chinese telecom giant Huawei. Asian markets were mostly higher. The Nikkei 225 rose +0.95% while the Shanghai Composite added +0.45%. With strong earnings and ahead of Thursday’s ECB statement which is expected to move towards more dovish policy, European equities were higher. The DAX jumped +1.64%. Yields on 10-yr. Bunds fell again, now at -0.357%. The May FHFA House Price Index rose +0.1%, below expectations. June Existing Home Sales fell to 5.270M, a little more than expected. Yields on 10-Year Notes moved higher today, closing at 2.069%. The September US$ reached its highest level since May, rising +0.480 to 97.420. August gold fell -0.4% to $1,421.70. September crude reversed early losses and moved up +1.0% to $56.77. Equities rose on expectations of positive earnings news from big technology companies. Volumes remained light. News midday that trade negotiators would be meeting in Beijing next week gave markets an added boost. Averages sustained those gains through the close, finishing broadly higher.


Japan Prime Minister Abe’s ruling coalition did well in Sunday’s elections. With the election out of the way, observers think a more moderate stance on the South Korea dispute could emerge. Asia markets closed lower. The Nikkei 225 slipped -0.23% as the Shanghai Composite fell -1.27%. British Conservatives are voting today on the new Prime Minister who will be announced tomorrow. European equities were mostly higher. The DAX gained +0.24%. Yields on 10-yr. Bunds keep falling, now at -0.347%. There were no major reports or key earnings scheduled today. Fed officials are now in the media blackout period prior to the FOMC meeting on July 31. Yields on 10-Year Notes eased to 2.048%. The September US$ firmed +0.125 to 96.940. August gold was flat, up +$0.20 to $1,426.90. August crude expired today, up +1.1% to $56.22. The new lead contract, September, also closed at $56.22. In early trade, an otherwise soft market was supported by strength in large-cap technology. Volume was light throughout the day. While technology stayed strong, it was never able to feed any momentum to other sectors. At the close, markets were higher.


The optimism following the Fed’s apparently even more dovish tone spilled over to Asia, where shares closed higher. The Nikkei 225 jumped +2.00% and the Shanghai Composite rose +0.79%. European equities closed modestly higher, waiting for further signals on the next policy moves of the ECB and the Fed. The DAX gained +0.26%. Yields on 10-yr. Bunds fell further to -0.322%. July preliminary Consumer Sentiment was slightly below estimates at 98.4. Baker-Hughes reported that the U.S. oil rig count for 07/12 fell by 5 to 779. Yields on 10-Year Notes rose to 2.050%. The September US$ rose +0.365 to 96.815. August gold fell -0.1% to $1,426.70. On news that Iran may have seized a UK flagged tanker, August crude could only manage a gain of +0.6% to $55.63. Rate-cut optimism fueled more gains in the overnight market and equities opened strong. Highs were set at the open, though, and markets trended lower throughout the day, eventually sinking into the red as the Fed walked back expectations of a 50 point cut. Selling pressure and volume accelerated in the final hour or so and markets closed moderately lower.