Daily Comments

Readings on China’s manufacturing PMIs came in well below expectations as growth slowed. With Beijing promising more stimulus, Asian markets were broadly higher. The Nikkei 225 rebounded to rise +1.82% and the Shanghai Composite jumped +1.97%. European markets gained traction. The DAX index added +0.16%. 10-year bunds yield -0.478%. June Construction Spending grew +0.1% MoM vs. +0.3% expected. The July Markit Manufacturing PMI printed at 63.4 (a record high) compared to consensus of 63.1, and the ISM Manufacturing Index came in at 59. vs. expectations of a 60.8 reading. Yields on 10-year Notes are falling and testing last week’s lows, ending at 1.17%. The September US$ Index dipped -0.12% to 92.080. September crude sank -3.39% to $71.44. August gold faded -0.1% to $1,812.40. US equity markets traded higher overnight, with the ES also opening stronger. The ES came close to another intra-day ATH, but persistent headlines about covid-19 variants dampened some bullish enthusiasm as prices came off their highs. Prices quietly kept drifting off highs and by the close all indices were firmly in the red.

Hong Kong’s Hang Seng Index finished the week down -5%. Asian markets were lower. The Nikkei 225 fell -1.80% despite a strong rise in June industrial output and the Shanghai Composite retreated -0.42%. European markets sold off. The DAX index fell -0.61%. 10-year bunds yield -0.458%. The advance Q2 Employment Cost Index rose +0.7% vs. +0.9% expected. June Personal Income was up +0.1% (a decline of -0.7% had been expected), Personal Consumption Expenditures climbed +1.0% (vs. +0.6% expected), and the PCE Price Index was “only” up +0.5%, or +4.0% annually. July Chicago PMI printed at 73.4 vs. 64.2 expected, and final Consumer Sentiment printed at 81.2. Baker-Hughes reported that the U.S. rig count gained 1, to 641. Yields on 10-year Notes are 1.232%. The September US$ Index bounced +0.30% to 92.145. September crude added +0.18% to $73.75. August gold fell -1.01% to $1,812.70. Yesterday after the close, Amazon’s earnings disappointed and in the after-hours session, its stock, along with the ES and NQ immediately plunged. Bulls did buy and drive prices off their lows, but all the indices still closed negative.

Hong Kong’s Hang Seng Index continued its bounce back rising +3.30% as China’s regulators softened their recent sharp tone. Asian markets were higher. The Nikkei 225 rose +0.73% and the Shanghai Composite powered higher by +1.49%. European markets were stronger. The DAX index gained +0.45%. 10-year bunds yield -0.451%. Initial Claims for the week of 07/24 dropped from 419K but remain stubbornly high at 400K (vs. 385K expected). Advance Q2 GDP was at the low end of expectations, +6.5% (vs. 8.5% expected), with the economy now surpassing its pre-pandemic size. Personal Consumption Expenditures were +11.8%. The June Pending Home Sales Index printed at -1.9% vs. consensus of -0.8%. Yields on 10-year Notes are 1.263%. After yesterday’s Fed policy update, the September US$ Index continues to weaken, down today by -0.46% to 91.890. September crude finished at its highest level in 2 weeks, up +1.7% to $73.62. August gold posted its largest 1-day gain since mid-May, up +1.6% to $1,828.70. The major averages rallied as soon as the session began. The ES just barely hit another ATH, but then pared some gains by the close.