Category: Future Trading News

Trading action was subdued this week as the US Thanksgiving holiday made markets sleepy. New growth and inflation data did nothing to deter the expectation of Fed rate liftoff in December. Global tensions briefly ratcheted up after Turkey shot down a Russian warplane that strayed into its airspace, further complicating the fight against ISIS in Syria. The euro continued to weaken in anticipation of the ECB monetary policy meeting next week where the central bank could expand its QE program and further cut key rates. Chinese stocks fell hard on Friday on a new round of crackdowns on brokerage houses, but stocks outside of China did not react significantly to the news. For the week, the DJIA lost 0.1%, the S&P500 was up less than 0.1%, and the Nasdaq edged up 0.4%.

Two more key pieces of the US monetary policy puzzle dropped this week: GDP and PCE inflation. There were no big surprises in the second reading of Q3 GDP. The main components met expectations, with the q/q annualized rate revised up to 2.1% from 1.5% in the advance reading, although this rate remains well below the final second quarter annualized GDP rate of +3.9%. Analysts chalked up the revision higher to an expansion of the inventory components of the data, offset by lower revisions to domestic spending components. Growth in the November Core PCE reading would have more or less clinched a December rate hike, but Wednesday’s flat/lower core reading is a more ambiguous outcome. The y/y reading didn’t budge from 1.3%, while the m/m figure was 0.046%, barely missing the rounding bar that would have left it flat. Inflation remains suppressed by lower energy costs, but the Fed has repeated ad nauseam that it will look past lower inflation from lower energy prices.

In other US data, the November Markit Manufacturing PMI index slipped to 52.6 from 54.1 in the prior month, putting the index at its lowest level in two years. According to Markit, domestic demand appears to be holding up well, but the sluggish global economy and strong dollar continue to act as dampeners on firms’ order book growth. Echoing the slight declines in other US homebuilding data numbers, October existing home sales declined to 5.36M units from 5.55M units in September. The October durables were better than expected and the September figures were revised much higher.

Continue reading “Futures Trading Action Subsided 12.01.2015”

TradeTheNews.com Weekly Market Update: Markets Undeterred by Terrorist Attacks

The week began with investors largely looking right past headlines related to the disturbing Paris terror attacks. European indices made up all of their losses from last week and US equities returned to gains after last week’s retreat. A second straight quarter of negative GDP put Japan back into technical recession, marking another setback for PM Abe’s grand plans for reviving his country’s economy. A chorus of commentary from US Fed officials book-ended the Oct FOMC minutes midweek, and largely cemented expectations US rates could very well begin going up next month, but that they will only be rising at a very tempered pace. In Europe, ECB President Draghi amped up expectations for more easing, while the PBoC cut short-term borrowing rates, to some extent fulfilling expectations that Beijing would do more to help the flagging Chinese economy. The US Dollar remained buoyed by the divergent central bank outlooks, resulting in a fresh 7-month low in the Euro. WTI crude blipped below $40 briefly but held that level into week’s end, while copper saw another fresh 6-year low. For the week the DJIA gained 3.4%, the S&P rose 3.3%, and the Nasdaq rebounded 3.6%.

The minutes from the last FOMC meeting sent fresh signals that the Fed is more and more confident that it will raise interest rates at the December meeting as long as job growth and inflation trends don’t take a turn for the worse. Most officials at the October meeting anticipated that December “could well be” the time for rate liftoff. “Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting,” read the minutes. The US Treasury curve flattened following the minutes and stocks surged as markets appeared more comfortable that they can handle a gradual rise in rates.

Japan preliminary third quarter GDP was negative for a second consecutive quarter (-0.2% q/q), marking Japan’s first technical recession since mid-2014 (the last one followed the increase in the consumption tax as part of Abe’s Three Arrows reform). Corporate capex spending did the most damage, falling -1.3%, while the soft JPY boosted exports in the quarter to +2.6% from -4.3% prior and consumption was nearly flat at +0.5%. The negative print further boosted expectations for more BoJ easing or a supplemental fiscal budget to address the slump, although the BoJ maintained its stance at its policy meeting on Wednesday. The BoJ maintained its annual pace of monetary base expansion at ¥80T and also kept its overall economic assessment unchanged, while it slightly tinkered with its inflation outlook. USD/JPY marked an eight-week high after the GDP and BoJ developments on Wednesday, touching 123.65 before tightening up into week’s end.

Continue reading “Futures Levels & Economic Reports 11.24.2015”