Very interesting price action this week folks. Get me take on where to next in this week’s Round-Up.
WEEKLY SOUND BITES;
- The Russell managed a small gain, but most of the major equity indexes ended the week lower, as investors weighed some encouraging economic data against worries about supply chain challenges, elevated valuations, and concerns over how stocks would respond to an eventual tightening in monetary policy. Also is the current stimulus bill working its way thru the US Congress and the tax plans that attempt to pay for it all. And finally, a potential train wreck is on the horizon in a few weeks on the Democrats and Republicans coming together to agree to an increase in the annual US Budget Deficit…this could impact markets if the US GOV is forced to shut down while both parties try to arrange an agreed upon dollar increase.
- On Tuesday, the Labor Department reported that core (less food and energy) consumer prices increased 0.1% in August, below consensus expectations for a 0.3% increase and the smallest gain since February. And on Thursday, the Commerce Department reported that August retail sales outside the volatile auto sector jumped 1.8%, defying consensus expectations for a small decline.
- While the softer-than-expected inflation data appeared to ease investors’ worries of expedited interest rate hikes, we saw that solid manufacturing and retail sales data, along with technical trading factors, contributed to higher yields as the week progressed. Currently however, markets will be heavily focused on Wednesday’s FOMC Policy Statement and “Power Ranger” Powell’s press conference; -QT vs interest rate lift off will be in questions; when and at what pace?
- Core eurozone bond yields rose in sympathy with U.S. Treasuries, with a Financial Times report saying that the European Central Bank (ECB) expects to meet its 2% inflation target by 2025 and is on course to raise interest rates in about two years—significantly ahead of consensus expectations. Meanwhile inflation in the UK jumped to 3.2% in August, its highest level in more than nine years.
- Japan’s stock markets rose over the week as campaigning began for a new President…Taro Kono is expected to win, and his policies suggest that more stimulus and continuity in central bank policy would be in the cards under his leadership. But we also saw that confidence levels among Japanese manufacturers fell to a five-month low in September. Data showed that Japan’s exports rose 26.2% year on year in August, less than expected and following a 37.0% gain in the previous month.
- And in China, weak August economic data, a fresh coronavirus outbreak in Fujian province, the growing debt crisis at embattled property developer China Evergrande Group, and the threat of tighter gaming regulations in Macau dampened investor sentiment. Worsening debt problems at Evergrande, China’s third-largest developer, dominated headlines as concerns grew about a potential debt restructuring of the company, whose debt load exceeds USD 300 billion. T he inability to repay bank interest is the latest sign of a liquidity crisis at Evergrande, which is emerging as a key test of the Chinese government’s willingness to bail out systemically important, highly indebted companies. On the economic front, China’s August indicators were surprisingly weak, underscoring the impact from continued coronavirus outbreaks across the mainland. Industrial output, retail sales, and fixed asset investment all missed expectations, particularly retail sales, which recorded its slowest growth pace since August 2020
Enjoy this week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
