There is an election in the UK today. The US is off on holiday and a Thursday 4 July makes for a long weekend. Swiss inflation undershot a bit. Otherwise, data is quite light today.
European stock markets are a little higher, with the FTSE 100 up half a per cent, the Cac rallying 0.6 per cent and the Dax falling in the middle. Sterling rose to its highest in three weeks versus the US dollar but this was a move on the other side as Treasury yields dipped on some soft US data, which also pushed the euro to its best in three weeks. Oil has come down a bit after rising on Hurricane Beryl.
Yields fell on weaker US data yesterday, maybe helping to push up the tech-heavy Nasdaq and sending the Dow Jones and Russell 2000 down a smidge. Gold rose sharply as yields declined and the dollar moved south.
ISM services came in at 48.8 versus a 52.8 expected – a new four-year low and five points lower than May’s figure of 53.8 – some real weakness there which sent Treasury yields lower. Factory goods orders were down 0.5 per cent versus +0.2 per cent expected. Durable goods orders ex-transportation down 0.1 per cent versus +0.4 per cent prior...again more softness in the data that the Federal Reserve should start to think about. There was little in the FOMC minutes to signal serious concern about overheating and policy needing to stay this tight. Remember, rising real rates means policy is getting more restrictive just as things are slowing down. But the Fed may be mindful of the US election.
Investors seem calmer about France. New polls and analysis of the run-offs suggest Marine Le Pen’s Rassemblement National (RN) will fall short of an absolute majority – it’s not particularly new information. This Republican Front stuff smells very anti-democratic; I wonder what the average homme on the rue makes of it?
The Trader is written by Neil Wilson, chief market analyst at Finalto
