Doldrums at last, with US retail and China housing in focus
A look at the day ahead in U.S. and global markets from Mike Dolan
With the inflation picture under control and market volatility back in its box, summer trading doldrums may well resume as long as the U.S. retail picture holds up later on Thursday.
The extraordinary round-trip for Wall Street's VIX volatility gauge .VIX was more or less complete on Wednesday as a benign U.S. consumer price report underscored bets the Federal Reserve will start easing next month - even if that is more likely just a quarter point rate cut rather than a half.
The VIX closed at just 16.2 on Wednesday, taking just seven trading days to return below its historic median after Aug 5's blistering 38.6 finish.
To put the speed of that about-face in context, historically it has taken 170 sessions on average for the index to return below median after any close above 35. And that puts the early August episode more in line with the brief "volmageddon" flurry in early 2018 than any more durable and pernicious disturbances.
All of which puts markets back on a more fundamental footing -- and that remains reasonably sound still ahead of another screed of U.S. economic updates later on Thursday.
The CPI and preceding producer price report this week both give the Fed a green light to start cutting rates next month, with any longer-term signals from its annual Jackson Hole symposium next week now on the radar.
Although readouts on rent remain irksome - with some arguing a Fed rate cut may actually help resolve that - three-month annualised CPI on a headline and core basis is now running well below the Fed's 2% target.
CHINA PROPERTY SECTOR
While futures have baked in a quarter-point cut for September, there is now just a one-in-three chance the Fed will opt for a 50 basis point move. But 100bps of easing remains in the curve by year-end and almost 200bps through next June.
Atlanta Fed President Raphael Bostic told Thursday's Financial Times he was open to an rate cut in September and added the Fed could not "afford to be late" to ease policy.
Even though they ticked up a notch on Thursday, Treasury yields are subdued and the two-year US2YT=RR is still below 4%. And after the S&P500's .SPX best close of the month so far on Wednesday, futures on the main stock indexes Esc1, NQcv1 are higher again ahead of the open.
The dollar .DXY remains on the back foot, although the euro EUR= has recoiled from 2024 highs above $1.10 as still-unnerving Chinese economic updates jar in Europe too.
While Chinese industrial and retail reports for July were mostly a mixed bag, the elephant in the room remains the ailing housing sector and Thursday's data showed China's new home prices fell at the fastest pace in nine years in July.
With 70% of Chinese household wealth held in real estate, a sector that at its peak accounted for a quarter of the economy, consumers have kept their wallets shut tight as property values deflate.
Propping up Chinese stocks .CSI300 from six-month lows on Thursday was the hope that the latest economic news would increase the chance of further monetary easing, and the offshore yuan CNH= fell back. The central bank injected cash through a short-term bond instrument and said it would roll over its medium-term lending facility later this month as it extends liquidity support.
By contrast, Japan's economy expanded by a much faster-than-expected annualised 3.1% in the second quarter, rebounding from a slump at the start of the year and backing the case for another near-term rate hike. In Europe, sterling GBP= nudged higher after solid British GDP data for the second quarter.
Globally, however, economic surprise indexes are running at their most negative in more than two years.
Switching back to the day's diary on Wall Street, the heavy economic data schedule probably gets topped with by the July retail sales report and the still highly sensitive weekly jobless readout.
WalMart WMT.N adds corporate flavour to the national retail aggregate with its quarterly earnings.
Dow component Home Depot HD.N warned of a decline in annual profit and a bigger drop in its annual sales earlier this week as weak discretionary spending dampened expectations. But its shares help up nonetheless.
In deals news, Kellanova K.N surged 7.8% on Wednesday after family owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal.
Key developments that should provide more direction to U.S. markets later on Thursday:
* U.S. weekly jobless claims, July retail sales and industrial production, August NAHB housing market index, Philadelphia Fed's Aug business survey, NY Fed's Aug manufacturing survey, June TIC data on Treasury flows
* St. Louis Federal Reserve President Alberto Musalem and Philadelphia Fed President Patrick Harker both speak
* U.S. corporate earnings: Walmart, Amcor, Applied Materials, Deere, Tapestry etc
* U.S. Treasury sells 4-week bills
China's home-price slump deepens to 9-year low in July https://reut.rs/3WEF2ZK
Global Economy Surprises Most Negative in 2 years https://tmsnrt.rs/3Amlcv8
History of VIX spikes https://reut.rs/3M6N3BW
Shelter inflation is slow to come down https://reut.rs/3WL7xFh
China's patchy economic recovery https://reut.rs/4cqQ3Un
Writing by Mike Dolan; Editing by Alison Williams
mike.dolan@thomsonreuters.com
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
