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Global Financial Calendar
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- Global stocks are trading weaker with the European Euro Stoxx 50 down -0.63% at an 11-month low and Sep S&Ps down -5.70 points. The dollar index rose to a 1-1/2 week high and the 10-year T-note yield fell to an 8-1/2 month low on signs US economic growth is slowing. The Senate later today will vote on a debt-limit compromise that already passed the House yesterday by a 269-161 vote margin, which raises the national debt ceiling enough to fund the government until 2013 and threatens automatic spending cuts to enforce a goal of cutting $2.4 trillion over the next decade. Commodities fell and the euro dropped to a 1-1/2 week low against the dollar after credit-default swaps to insure the government debts of France, Italy and Spain all climbed to records. Jun Euro-Zone producer prices were unchanged m/m, slightly weaker than expectations of +0.1% m/m, which helped German bund prices climb and the 10-year German bund yield to fall to an 8-1/2 month low of 2.394%.
- The Asian stock markets today closed lower with Japan down -1.21%, China -0.72%, Australia -1.43%, South Korea -2.46%, India -1.12%. The weaker than expected Jul ISM manufacturing report that showed US manufacturing activity slowed to a 2-year low dampened the outlook for Asian exporters and help drive Asian stocks lower today. Chinese stocks were also undercut after the Xinhua News Agency website said the PBOC may boost borrowing costs around Aug 10, a day after inflation figures are due to be released. India's Sensitive Stock Index tumbled after RBI Governor Subbarao said further interest rate increases will be necessary to tame inflation, which raised concern that corporate earnings growth will slow. The Australian dollar weakened against the US dollar after the RBA kept its overnight cash rate unchanged at 4.75% as RBA Governor Stevens cited "the acute sense of uncertainty" in financial markets as a key factor for inaction.
- September S&Ps this morning are trading down -5.70 points. The US stock market yesterday rallied early on speculation that US lawmakers will raise the debt ceiling, but shed its gains and finished lower after US manufacturing growth slipped to a 2-year low in July: Dow Jones -0.09%, S&P 500 -0.41%, Nasdaq Composite -0.43%. The S&P 50 and the Dow tumbled to 1-month lows and the Nasdaq fell to a 2-week low. Bearish factors included (1) concern the economy is slowing after the Jul ISM manufacturing index fell more than expected to its slowest pace in 2 years (-4.4 to 50.9 versus expectations of -0.8 to 54.5), (2) weakness in health-care companies after Medicare announced an 11.1% rate cut for next year for nursing-home providers, and (3) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
- Bullish factors included (1) an early rally in stocks on optimism congressional leaders will agree on a deal to raise the US debt ceiling, (2) reduced concerns over a slowdown in the Chinese economy after the Jul China PMI manufacturing index fell less than expected (-0.2 to 50.7 versus expectations of -0.7 to 50.2), (3) the stronger than expected Jun construction spending along with the upward revision to May (Jun +0.2% versus expectations of +0.1% and May revised up to a gain of +0.3% from a previously reported decline of -0.6%), and (4) reduced price pressures after the larger-than-expected decline in the Jul ISM prices paid sub-index to its slowest pace of growth in a year (-9.0 to 59.0 versus expectations of -4.0 to 64.0).
- NYSE Euronext (NYX) slipped 2.2% in European trading after the US exchange company planning to be bought by Deutsche Boerse AG reported that Q2 net income fell -16% to $154 million as revenue from European derivatives and US equity trading declined.
- September 10-year T-notes this morning are trading up +14 ticks and at an 8-1/2 month nearest-futures high as global equity markets slide. T-note prices yesterday rallied sharply and closed higher after US manufacturing growth slowed to a 2-year low in July: TYU11 +14.5, FVU11 +7.5, EDZ11 +1.5. The 10-year T-note yield tumbled to an 8-1/2 month low of 2.716%. Bullish factors included (1) the larger-than-expected decline in the Jul ISM manufacturing index (-4.4 to a 2-year low of 50.9 versus expectations of -0.8 to 54.5), (2) the larger-than-expected decline in the Jul ISM prices paid sub-index to its slowest pace of growth in a year (-9.0 to 59.0 versus expectations of -4.0 to 64.0), and (3) increased safe-haven demand for Treasuries after the stock market plunged. Bearish factors included (1) President Obama's statement that congressional leaders had approved a deal to raise the US debt ceiling, which temporarily reduces the safe-haven demand for Treasuries and (2) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
- The dollar index this morning is higher and at a 1-1/2 week high with the dollar/yen +0.22 yen and the euro/dollar -0.55 cents. The dollar index yesterday recovered from early losses and rallied to a 1-week high and settled higher after President Obama said congressional leaders had approved a deal to raise the US debt ceiling: Dollar Index +0.365, USDJPY +0.413, EURUSD -0.01476. Bullish factors included (1) the statement from President Obama that congressional leaders had approved a deal to raise the US debt ceiling, (2) weakness in the British pound which fell to a 1-week low against the dollar after the Jul UK PMI manufacturing index contracted at its slowest level in 2 years, and (3) comments from Japanese Finance Minister Noda who said he's watching currency markets "closely," which prompted the yen to weaken from a 4-1/2 month high against the dollar on fears of currency intervention by Japan to curb the yen's strength. Bearish factors included (1) the larger-than-expected drop in the Jul ISM manufacturing index which slid to its slowest level in 2 years and fueled speculation the Fed may increase its emergency stimulus measures and (2) concern that the US will still face a credit downgrade from ratings agencies even with an increase in the debt ceiling.
- Sep crude oil prices this morning are down -64 cents a barrel and Sep gasoline is -0.96 of a cent per gallon. Sep crude oil and gasoline prices yesterday rallied early after President Obama said congressional leaders approved a deal to raise the US debt ceiling, but gave up their gains and turned lower after US factory growth in July fell to its slowest pace in 2 years: CLU11 -$0.81, RBU11 -0.39. Sep crude fell to a 1-month low and Sep gasoline rallied to a 2-3/4 month high but erased its gains and closed lower. Bearish factors included (1) the rally in the dollar index to a 1-week high, which reduces investment demand for commodities, (2) the larger-than-expected decline in the Jul ISM manufacturing index which slowed to its slowest pace in 2-years and signals reduced energy consumption, and (3) increased OPEC output as OPEC production in July rose by 245,000 barrels a day from Jun to 29.565 million barrels a day, the most since December 2008. Bullish factors included (1) an early rally after President Obama said that congressional leaders had reached a deal to raise the US debt ceiling, which boosts the prospects for economic growth and energy demand and (2) the stronger-than-expected Jul China PMI manufacturing index.
Global Financial Calendar
| Tuesday 8/2/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0830 ET | Jun personal spending expected +0.1%, May unchanged (annual revisions will be released). Jun personal income expected +0.2%, May +0.3%. Jun PCE deflator expected +2.6% y/y, May +2,5% y/y. Jun PCE core deflator expected +0.2% m/m and +1.4% y/y, May +0.3% m/m and +1.2% y/y. |
| 0855 ET | Redbook weekly retailer sales. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1700 ET | Jul total vehicle sales expected 11.80 million, Jun 11.41 million. Jul domestic vehicle sales expected 9.25 million, Jun 8.95 million. |
| United Kingdom | |
| 0430 ET | Jul UK PMI construction expected -0.5 to 53.1, Jun -0.4 to 53.6. |
| Euro-Zone | |
| 0500 ET | Jun Euro-Zone PPI expected +0.1% m/m and +5.9% y/y, May -0.2% m/m and +6.2% y/y. |
| CHI | |
| 2100 ET | Jul China non-manufacturing PMI, Jun -4.9 to 57.0. |
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