Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
The never-ending bond rally doesn’t end, new ECB and Fed picks, and PMI data points to downturn. Here are some of the things people in markets are talking about today.
New lows
The global sovereign bond rally continues apace this morning. The yield on 10-year Treasuries dropped to the lowest level in more than two years, hitting 1.955%, while Germany’s 10-year yield is trading within a gnat’s whisker of the ECB deposit rate at -0.4%. The huge leg-up in Italian bonds still has legs, with the 10-year yield hitting 1.703% this morning as the government eases its budget ambitions. Analysts don’t see an end to the global rally anytime soon -- with a few notable exceptions.
New heads
The extended horse-trading in Brussels over who would head up some of the European Union’s most important institutions has produced some surprising results. For markets, the most significant one is the selection of IMF chief Christine Lagarde as the next head of the European Central Bank. She would be the second French head of the bank, the first woman, and more of a politician than a monetary policy expert. In the U.S., President Donald Trump picked Christopher Waller and Judy Shelton as his nominees for the Federal Reserve board, with both of them seen as supporting easier policy.
Nothing new
Composite purchasing-managers data from the euro area this morning showed an expansion, coming in at 52.2 in June for the highest reading since November. The headline number hid a slump in both manufacturing and business confidence. A similar reading for the U.K. came in at 49.7, the first time it has pointed to a contraction since the immediate aftermath of the Brexit referendum in 2016. U.S. PMI numbers for June are due at 9:45 a.m. Eastern Time.
Markets mixed
Overnight, the MSCI Asia Pacific Index slipped 0.3% while Japan’s Topix index closed 0.7% lower as the yen strengthened against the dollar and tech stocks reversed some of their recent gains. In Europe, the Stoxx 600 Index was 0.8% higher at 5:50 a.m. in a broad-based rally which sees only the oil and gas sector lower on the day. S&P futures point to a gain at the open, Treasury yields are as outlined above and gold is higher.
Coming up
With the holiday tomorrow, today sees something of an eco-data dump. At 8:15 a.m., ADP employment change will give investors at look at the job market ahead of Friday’s payrolls data. Weekly jobless claims and the May U.S. trade balance are at 8:30 a.m. Durable goods, factory orders and ISM non-manufacturing are all at 10:00 a.m. The NYSE is closing at 1:00 p.m. ahead of the holiday.
What we've been reading
This is what's caught our eye over the last 24 hours.
- U.S. bond traders might want to rethink taking the day off on Friday.
- Grim earnings forecasts are getting worse by the week.
- Saudi-Russian oil fling becomes a marriage to last an “eternity.”
- Pentagon calls China’s South Sea missile tests “ truly disturbing.”
- Tesla soars as Model 3 paces record quarter for deliveries.
- How the two Tory rivals for PM reckon they can fix Brexit.
- U.S. top of the garbage pile in global waste crisis.
To contact the editor responsible for this story: Sid Verma at sverma100@bloomberg.net, Cecile Gutscher
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