Research Market strategy
By Swissquote Analysts
Video news

China home crisis deepens on Country Garden loss warning

Released yesterday, the latest CPI data showed that the headline inflation in the US ticked higher from 3 to 3.2%. That was slightly lower than the 3.3% penciled in by analysts, core inflation eased to 4.7% in July from 4.8% expected by analysts and printed a month earlier.

Today, eyes will be on the July PPI figures before the weekly closing bell, where core PPI is seen further easing, but headline PPI may have ticked higher to 0.7% on monthly basis, probably on higher energy, crop and food prices.

Yesterday’s slightly softer-than-expected inflation numbers and the initial jobless claims which printed almost 250K new applications last week - the highest in a month - sent the probability of a September pause to above 90%, though the US 2-year yield advanced past the 4.85% level, and the longer-terms yields rose with a weak 30-year bond action, which saw the highest yield since 2011.

Major stock indices stagnated.

The USD index consolidates above the 50 and 100-DMAs while the EURUSD sees support at the 50-DMA, near the 1.0960 level, and could benefit from further weakness in the US dollar to attempt another rise above the 1.10 mark.

European nat gas futures fell 7% yesterday after a 28% spiked on Wednesday on concerns that strikes at major export facilities in Australia could lead to a 10% decline in global LNG exports, while the escalating property crisis in China weighs on investor sentiment, as major Chinese indices, including technology stocks are down, except for Alibaba.

Watch the full episode to find out more!

China home crisis deepens on Country Garden loss warning | MarketTalk: What’s up today? | Swissquote
By
Swissquote (in English)
Video news

All eyes on US inflation!

US equities fell, while yields pushed higher in the run up to today’s most important US inflation data. Inflation in the US is expected to have rebounded from 3 to 3.3% in July and core inflation may have steadied at around 4.8%. Any bad surprise on the inflation front could revive the Federal Reserve hawks, but we are far from pricing another hike in September just yet; activity on Fed funds futures assesses more than 85% chance for pause in September FOMC meeting. Rising oil, crop and rice prices are the major upside risks, while potential downside pressure on shelter could counter higher raw material prices.

The idea of further Fed hikes is not helping sentiment in bond markets, especially since Fitch downgraded the U.S. credit rating from AAA to AA+. Moody’s downgraded credit ratings for 10 small and midsize US banks, citing higher funding costs, potential regulatory capital weaknesses and risks tied to commercial real estate loans. And speaking of banks, Italian banks also sold off earlier this week on news of a new windfall tax. The latter triggered some risk averse inflows into bonds until Italy issued a clarification of its new tax on banks’ windfall profits, saying that the impact may be limited for some banks and the levy won’t exceed 0.1% of a firm’s assets.

The U.S. 2-year yield rebounded past 4.80%, while the 10-year yield is back to around%, after a spike to 4.20% on Fitch downgrade.

In China, slow imports-exports, deflation and property crisis counterweight stimulus news led rally.

Watch the full episode to find out more!

All eyes on US inflation! | MarketTalk: What’s up today? | Swissquote
By
Swissquote (in English)