Market Observations - Sep 7
Uphold Institutional
Uphold provides an edge for institutional investors to succeed in the new digital asset economy.
Econ Brief: This morning, MBA mortgage applications fell 2.9% in the week ending September 1, following a 2.3% gain the week prior. The 30-year mortgage rate, meanwhile, fell 10bps to 7.21%. Also this morning, the U.S. trade deficit widened 2% to $65.0b in July, the widest in two months. However, according to the median estimate on Bloomberg, the deficit was expected to widen to $68.0b. Imports rose 1.7% to $316.7b, the highest level since April, and exports rose 1.6% to $251.7b in July.
Additionally, this morning, the ISM Services Index unexpectedly rose from 52.7 to 54.5 in August, a 6-month high. According to estimates, the index was expected to fall to 52.5.
U.S. Wednesday Market Wrap:?Some fresh data on Wednesday showed that, despite all the Federal Reserve’s rate hikes, the economy continues to motor along. First, the Commerce Department reported a July U.S. trade deficit that was narrower than economists had expected, prompting them to lift their forecasts for gross domestic product again. Then, the Institute for Supply Management reported that its index of service-sector activity rose to a six-month high last month. Neither report seems likely to push the Fed to raise rates when it meets later this month, and interest-rate futures imply investors think the central bank is more likely to stay on hold through the remainder of the year than to tighten again. Stocks slipped lower, with the Dow dropping 199 points or 0.6%, the S&P lost 0.7%, and the tech-heavy Nasdaq tumbled 1.1%. Only two S&P sectors closed green. Utilities +0.18% led and technology -1.08% lagged.
After warning about higher fuel costs, airlines came under pressure today, as prices have jumped about 30% since early July. Southwest Airlines narrowed its revenue outlook for this quarter as international travel continues to outweigh domestic travel.
Apple shares fell 4% on news that China banned iPhone use for government officials at work. While it may seem like a small segment of the company’s market, fears are that the government could introduce further restrictions as it reduces reliance on overseas technologies.
Chinese property market remains volatile as Evergrande Group soars.?The property developer’s shares jumped 70%, helping buoy Country Garden Holdings, Logan Group, and others in the industry. It comes after Country Garden narrowly avoided default on its dollar-denominated bonds by making $22.5 million in coupon payments. With that said, the payments were originally due in August but submitted hours before the 30-day grace period expired. The industry stress continues, but a shimmer of good news was enough to spark a rally.
Despite disappointing German industrial output, where the 0.8% decline was twice expectations, the euro is holding above $1.07, where large options are expiring over the next few sessions. The USD is consolidating against the Japanese yen, where the fear of intervention has increased. Sterling remains on its back foot after yesterday’s seemingly dovish comments by Bank of England Governor Bailey.
The MSCI Asia Pacific Index fell for the third consecutive session. All the prominent bourses are in the red, but India. Europe’s SXXP is trying to snap a 6-day slide, but it may be difficult if the U.S. market extends the retreat seen in electronic trading.
Benchmark 10-year yields are mostly 2-3 bps lower in Europe. The Gilt yield is off 7bps. The 10-year U.S. Treasury yield is down slightly more than a single basis point to slightly below 4.27%.
After falling nearly 2% in the past four sessions, gold stabilizes in a narrow range above $1916.
October WTI is also consolidating and is inside yesterday’s range, which was inside Tuesday’s range. It is in a little more than a dollar range below $87.75 today. API reportedly estimated a 5.5m barrel drawdown, nearly twice what is expected from today’s EIA estimate.?
China’s exports and imports fell less than expected in August and less than in July. Exports declined 8.8% in August from a year ago after a 14.5% decline in the year to July. Imports contracted 7.3% in August and had slumped 12.4% in July. The trade surplus came in at $68.36b, down from $80.60b. China’s shipments to ASEAN countries and Europe grew strongly, while the export slump to the U.S. moderated (-9.5% vs. -23.1% in July, year-over-year). Separately, China reported its reserves fell by about $44b last month, trimming this year’s gain to around $32.4b. Note that China continued to buy gold and added roughly 29 tons last month, worth about $1.9b. It holds about 135 tons of gold (~$9b) in its $3.1 trillion reserves.
Today’s U.S. data typically do not move the markets. Unit labor costs and productivity are derived from Q2 GDP. Recall that Q2 GDP was revised lower last week (2.1% vs. 2.4%). All else being equal, that would suggest productivity will be revised down from the initial estimate of 3.7%, and unit labor costs will be revised up from 1.6%. Weekly jobless claims may attract more attention, but not much. Weekly initial claims have fallen for the past three weeks to 228k. The 4-week moving average is at 237.5. The four-week moving average peaked this year in June near 257k. Recall that at the end of 2019, the four-week average was at 235.5k. There are four regional Fed presidents (three are voters: Harker, Goolsbee, and Williams, and the fourth is Bostic) that will talk while the market is open today, but views are fairly clear. Fed Governor Bowman speaks shortly after the markets close and is on a panel about the future of money. Although there is some variance in opinion, actual dissents seem remarkably low.
领英推荐
Crypto Market Rundown:
The Electric Reliability Council of Texas (ERCOT) paid bitcoin miner Riot Blockchain (Nasdaq: RIOT, +233% YTD) $31.7 million in energy credits in August to not mine bitcoin.
The U.S. Financial Accounting Standards Board (FASB) announced on Wednesday that companies will have to report Bitcoin/Altcoin assets at fair value, a measurement that captures the most current value of an asset.
Yesterday, Ark Invest & 21 Shares filed for the first U.S. Spot ETH ETF, leading Bloomberg ETF analyst James Seyffart to believe more spot Ethereum ETFs will be filed in the coming days.
Visa’s Head of Blockchain/Crypto Cuy Sheffield says Visa payments will rely on ‘multiple blockchains’ - the future is multi-chain??
$500B Korean asset manager Mirae Asset Securities taps Polygon labs to develop tokenized securities network.?
Publicly traded Korean firm Neowiz plans on building games on Avalanche.?
The global crypto market cap is $1.04T, down 0.24% in the past day.
Top 5 Gainers on Uphold Ascent in the past 24H:?
Top 5 Losers on Uphold Ascent in the past 24H:?
NOT FINANCIAL ADVICE
Please note that Uphold and its affiliates do not provide investment, tax, or legal advice. This message is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice and before taking any action you should consult your own advisors. Note that digital assets such as cryptocurrencies present unique risks for investors. Please see our disclaimer regarding risks specific to holding digital assets before investing.