The US stock market fell back on the 15th. At the end of the game, he accelerated his pace. The Fed’s fight against inflation is not over yet, it seems.
S&P 500 Index 4437.86-51.86-1.16% Dow Jones Industrial Average 34946.39-361.24-1.02% Nasdaq Composite Index 13631.05-157.28-1.14%
The S&P 500 index fell 1.2%, falling below its 50-day moving average for the first time in nearly three months.
S&P 500 stock index and 50-day moving average
Source: Bloomberg
U.S. retail sales rose faster than expected in July, suggesting the economy could weather higher interest rates and deter the Fed from reversing policy. By sector, financials were cheap, weighing down the overall index. Fitch Ratings has warned of downgrades for some U.S. banks, including JPMorgan Chase and Bank of America (BofA). Discover Financial Services fell sharply after its CEO stepped down.
U.S. Retail Sales Growth Exceeds Market Expectations in July;
Fitch Analysts Warn of Downgrading of Some U.S. Banks, Report
“The latest retail sales figures show that the U.S. economy is still holding up pretty well,” Reese Williams, chief strategist at Spouting Rock Asset Management, said in a telephone interview. “It’s clear that the economy is doing better than expected six months ago,” he said.
Williams said he was skeptical that inflation would fall to and remain at the Fed’s 2% target by the end of the year.
Financial officials are also cautious. Minneapolis Fed President Neel Kashkari said at an event on Wednesday that inflation was coming down but was “still too high.”
Kashkari says inflation is ‘still too high’ despite progress in containment (1)
Statement by Governor Kashkari
Source: Bloomberg
Looking at corporate earnings, Home Depot’s May-July second-quarter earnings beat average analyst estimates. This suggests that consumers are spending slightly more than expected on home repairs and renovations. Earnings reports from Target and Walmart are also due this week, which could provide more information on consumer trends.
Home Depot Earns Better Than Expected in May-July as Home Improvement Spending Continues
The market is becoming increasingly cautious about how long consumer-related companies can maintain their pricing power as the effects of tightening monetary policy appear with a time lag.
”Sooner or later that grace period will wear off. “For now, companies can raise prices, but already consumers are complaining, reluctant to buy or stop buying,” he said.
“This year, we have indicated that we expect a recession to start sometime between the Labor Day holiday (September 4 this year) and the end of the year,” he said. He said he maintains his forecast, but expects only a mild economic slowdown.
US Treasuries
Shorter maturities rose in the U.S. Treasury market. Amid global bond selling, there was a dip buying. Options traders are adjusting their pricing for the possibility that policy rates and inflation will stay higher for a longer period of time. The 10-year bond yield was temporarily 4.27%, the highest level since October last year, and then reduced its rise. Yields on two-year bonds rose above 5% at one point, but then reversed and fell.
JGB latest price vs. previous business day (bp) rate of change US 30-year yield 4.32%2.80.64% US 10-year yield 4.21%2.20.52% US 2-year yield 4.95%-1.7-0.34% US Eastern Time 16 47 minutes past the hour
foreign exchange
In the foreign exchange market, the yen is almost unchanged against the dollar. Prices were a bit volatile during the day.
Bloomberg Dollar Index 1239.521.670.13% USD/JPY¥145.57¥0.010.01% EUR/USD$1.0903-$0.0003-0.03% 16:47 US Eastern Time
Finance Minister Shunichi Suzuki said at a post-cabinet press conference on the 15th that the yen had weakened to the 145 yen level against the dollar for the first time since November last year. I want to take appropriate measures,” he said. He said he is following developments in the currency market with a high degree of vigilance.
Japan’s real gross domestic product (GDP) for the April-June quarter increased by 6.0% year-on-year, marking the third straight quarter of growth. It greatly exceeded market expectations (up 2.9%).
The pound rose sharply today. After gaining 0.6% against the dollar at one point, it slumped. The pound buying was driven by better-than-expected wage growth in the UK.
UK wages grow at record high, fueling inflation fears at Bank of England
crude
New York crude oil futures fell to a two-week low. China’s economic slowdown has heightened fears that it will undermine demand in the world’s largest oil importer.
Crude oil prices plunged in line with the drop in stock prices amid thin trading. The People’s Bank of China’s (PBOC) unexpected rate cut has plagued Chinese authorities, from a deepening real estate downturn to weak consumer spending and concerns over shadow banking. embossed.
“Oil markets have been affected by concerns over economic growth,” said UBS Group analyst Giovanni Stonovo. “While China’s economic data continues to be disappointing, US economic data, including retail sales, are strong. Market participants fear the Fed may need to raise interest rates further. I am concerned,” he said.
WTI futures for September delivery on the New York Mercantile Exchange (NYMEX) closed at $80.99 a barrel, down $1.52 (1.8%) from the previous day. London ICE’s North Sea Brent October contract fell $1.32 (1.5%) to $84.89.
Money
The gold spot market continues to fall slightly. It hit its lowest level since late June. The view that the US Fed will maintain its tightening policy was conscious.
U.S. retail sales outperformed market expectations, undermining expectations that the Fed would turn to monetary easing.
Last week, the US Producer Price Index (PPI) beat expectations. Priyanka Sakdeva, an analyst at Philip Nova, said policy makers are increasingly likely to continue a “higher and longer” interest rate environment.
gold spot price
Source: Bloomberg
Spot gold was down 0.1% to $1,904.86 an ounce as of 2:05 pm New York time. December gold futures on the New York Mercantile Exchange (COMEX) fell $8.80, or 0.5%, to close at $1,935.20.
Original title:S&P 500 Drops Below Key Level in Late-Day Slide: Markets Wrap(excerpt)
Pound Outshines on Wage Growth, Yen Ends 6-Day Drop: Inside G-10
Oil Hits Two-Week Low as Growing China Woes Offset Tight Supply
Gold Eases to Lowest Since June as Traders Assess Fed Path
2023-08-15 20:52:00
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