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Bannon's exit lifts stocks, dollar
-- U.S. stocks rebounded in a volatile session on Friday, while the dollar cut losses and bond yields rose to session highs, as reports emerged U.S. President Donald Trump fired his controversial chief strategist Steve Bannon. President Donald Trump fired chief strategist Steve Bannon on Friday, the White House announced, ending the turbulent tenure of a rabble-rousing conservative media entrepreneur and political activist who was a darling of Trump's base. "There’s a lot of hopeful people thinking that, you know what, he has been a divisive figure in the White House," said Peter Costa, President of Empire Executions. "Getting rid of him might be a good deal for the president.”
Gold turned negative after the reports, which seemed to turn investor focus away from uncertainty over Trump policy and nerves over terrorist attacks in Spain. Trump has alienated Republican colleagues, corporate leaders and overseas allies this week with several controversial comments after violence related to a white nationalist protest in Virginia last weekend. His criticism of removals of U.S. Confederate monuments that celebrate defenders of slavery sent shivers through markets as investors bet that the stance would hurt Trump's ability to build enough consensus to deliver growth boosts such as tax reform and stimulus spending. See full story.
Wall Street slides on Trump policy worries
-- U.S stocks hit session lows in early afternoon trading on Thursday as investors worried about President Donald Trump's ability to pursue his pro-growth policies. The market also remained on edge after a van crashed into dozens of people in the center of Barcelona on Thursday and Spanish media, citing police sources, said at least 13 people were killed. Catalan's police said the van crash is being treated as a terror attack.
Trump disbanded two business councils on Wednesday after several chief executives quit in protest over his remarks on white nationalists. Weak inflation has spurred concerns that the Fed may have to cool its monetary tightening pace even though the economy is growing moderately and the unemployment rate is at a 16-year low. The central bank is also considering reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities. See full story.
Dollar weakens after Fed minutes
-- The U.S. dollar weakened on Wednesday afternoon, erasing earlier gains, as traders reacted to the one-two punch of the dissolution of a pair of business advisory groups to the White House, and a dovish read of minute from the Federal Reserve’s July meeting. President Donald Trump’s manufacturing council and his strategy & policy forum were disbanded, which he tweeted midday Wednesday, after a wave of CEOs stepped down from his advisory panels in the wake of Trump’s reaction and recent remarks about a deadly clash this weekend centered on a white-supremacist protests in Charlottesville, Va. The termination of Trump’s economic councils casts doubt on the U.S. leader’s ability to forge the type of collaboration inside and outside of Washington to enact dollar-boosting, pro-growth reforms that had been the linchpin of his political campaign, including tax cuts, infrastructure spending and regulation.
Gyrations in the dollar on Wednesday, sparked by the political drama, come on a day in which the Fed’s minutes were expected to be the main catalyst for the buck. However, the Fed minutes, an account of its meeting last month, may have offered little for dollar bulls to cheer about. “The market was really hoping for some clarity from the Fed, but we have no more insight than before,” said Lennon Sweeting, head of corporate trading & chief market strategist at XE.com, a currency-related data and service provider. “Expectations for another rate hike this year are pretty much diminished now.” See full story.
Strong U.S. retail sales bolster growth outlook
-- U.S. retail sales recorded their biggest increase in seven months in July as consumers boosted purchases of motor vehicles and raised discretionary spending, suggesting the economy continued to gain momentum early in the third quarter. Retail sales for June and May also were revised higher, which should help to assuage concerns about consumer spending after a slowdown at the start of the year. Tuesday's upbeat report from the Commerce Department likely keeps the Federal Reserve on course to raise interest rates again in December. "American shoppers flocked to the malls in July, suggesting consumers are well-positioned to propel the economy forward in the second half of the year," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "It should tamp down chatter about the Fed delaying rate hikes until next year."
Retail sales jumped 0.6 percent last month, the largest gain since December 2016. June's retail sales were revised to show a 0.3 percent gain instead of the previously reported 0.2 percent drop. Excluding automobiles, gasoline, building materials and food services, retail sales surged 0.6 percent last month after an upwardly revised 0.1 percent gain in June. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have dipped 0.1 percent in June. The report helped to shift investors' attention from recent weak inflation data as markets try to forecast the Fed's next policy move. The U.S. central bank has raised rates twice this year and economists expect it will announce a plan to start unwinding its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September. See full story.
Debt-ceiling fears bubble up in Treasury bills
-- The deadline to raise the federal government’s debt ceiling is approaching fast, and concerns are showing up at the short end of the yield curve, the line that traces yields across maturities. The 3-month Treasury bill matures around the time the Treasury is expected to run out of money unless Congress boosts the limit on federal borrowing. The Congressional Budget Office warned that if the U.S. did not hike its debt ceiling in time, it could lead to a default on its gold-plated debt. As a result, selling pressure has pushed the interest rate on the 3-month bill past the interest rate on the 6-month bilf or the first time since the financial crisis on July 20, inverting the short end of the yield curve. Prices for Treasury bills move inversely to their yield.
Usually, longer-dated maturities carry higher yields than shorter-term maturities. But with the repayment of the 3-month Treasury bill in potential jeopardy, its price has steadily slipped. The spread between the two maturity lengths of government paper (see chart below) entered negative territory after maintaining an average spread of about 10 basis points this year. The markets’ early reaction demonstrated investors had “a lack of faith that the process will run smoothly,” wrote Ian Lyngen, head of U.S. rates strategy for BMO Capital Markets. Auctions for short-dated Treasurys have also suffered. An auction of 3-month bills on Monday attracted weak demand, with the bid-to-cover ratio, a measure of investor appetite, at its lowest point since 2009. See full story.
Inflation remains soft in July, CPI shows
-- U.S. consumer prices remained soft for the fifth straight month in July, raising more questions about whether inflation will eventually rise to hit the Federal Reserve’s 2% annual rate target. The consumer price index rose a seasonally adjusted 0.1% in July, the Labor Department said Friday. Food prices rose 0.2% in July while energy prices slipped 0.1%. The core CPI, which excludes volatile food and energy costs, also rose 0.1%.
Economists surveyed by MarketWatch had expected both the overall CPI and core rate to increase by 0.2%. “The CPI data was very muted and not something which the Fed is going to be happy to look it,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd, in an email note. Consumer prices have risen an unadjusted 1.7% over the past 12 months, up slightly from 1.6% in June. But on a core basis, which is watched more closely by Fed officials, consumer prices remained at a 1.7% annual rate, the same rate as in May and June. See full story.
Wall Street’s ‘fear gauge’ nears 9-month high
-- A popular gauge of fear and volatility on Wall Street surged on Thursday and was nearing its highest level since U.S. Election Day amid rising geopolitical tensions centered on North Korea. The CBOE Volatility Index, or VIX, jumped about 44% to 16.04. That’s still below its historical average of around 20, but underlines an escalating sense of trepidation around global events. At the least, it may be reflecting growing expectations a stock market that’s knocked out repeat all-time highs without much of a break may be primed for a substantial downturn.
Thursday’s rise in the VIX represents its highest level since Nov. 8 when it hit 18.74, and its sharpest single-session climb, also since May 17, when it jumped 46%, according to FactSet data. The downdraft for the equity market comes amid rising geopolitical tensions, after a North Korean army commander said “sound dialogue” isn’t possible with U.S. President Donald Trump and “only absolute force can work on him,” according to state media. North Korea also laid out detailed plans of how it would launch a missile strike on U.S. military bases in Guam. See full story.
North Korea tension triggers run to safety
-- U.S. President Donald Trump's warning to North Korea and Pyongyang's threat of possible armed retaliation drove investors out of stocks and other risky assets on Wednesday and into textbook safe havens like gold and Treasuries. Trump's remarks on Tuesday that North Korea would face "fire and fury like the world has never seen" weighed on Wall Street and drove up the VIX "fear gauge", or the cost of protection against a drop in the S&P 500. The VIX rose further on Wednesday, as far as 12.63, its highest in more than a month.
A spokesman for the Korean People's Army said in a statement on Wednesday it was "carefully examining" plans for a missile attack on the U.S. Pacific territory of Guam, which has a large U.S. military base. Traditional safe-haven currencies including the Swiss franc and Japanese yen rose against the U.S. dollar, while those from emerging markets slid. "Obviously we are looking at the increased tensions between the U.S. and North Korea," said Brad Bechtel, managing director FX at Jefferies in New York. See full story.
Credit-card debt hits record high
-- American consumers just hit a scary milestone. They now collectively have the most outstanding revolving debt — often summarized as credit card debt — in U.S. history, according to a report Monday released by the Federal Reserve. Americans had $1.021 trillion in outstanding revolving credit in June 2017. This beats the previous record in April 2008, when consumers had a collective $1.02 trillion in outstanding credit revolving credit. “This record should serve as a wake-up call to Americans to focus on their credit card debt,” said Matt Schulz, a senior industry analyst at CreditCards.com, a credit card website. “Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble.”
Revolving credit had been growing at an annual growth rate of 4.9%. One reason: More consumers are getting access to credit cards backed by major banks and issuers in recent months. More than 171 million consumers had access to those cards in the first quarter of 2017, the highest number that has had access since 2005, when about $162.5 million people had access. The New York Federal Reserve released a new report Wednesday that showed U.S. collective household debt balances totaled $12.73 trillion in March 2017, surpassing the 2008 peak of $12.68 trillion. See full story.
Dow tracks ninth straight record close
-- U.S. stocks were slightly up in early afternoon trading on Monday, with the Dow on track to close at a record high for the ninth straight day, after squeezing out another all-time high just after the open. The rise in the Dow also put the blue-chip index on track to close higher for the 10th straight day, its longest streak of consecutive gains since February. Markets have been boosted in recent weeks by robust second-quarter earnings, and the strong July employment report on Friday added to the positive sentiment.
"We have strong earnings that is helping the market," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group. "I have seen a lot of companies exceeding their revenue growth and we also have better-than-expected global growth, which are the main drivers for equities." Analysts, on average, expect S&P 500 earnings to have expanded 12 percent in the second quarter and project earnings up 9.3 percent for the September quarter, according to Thomson Reuters I/B/E/S. See full story.
Dollar has best day since January after strong jobs report
Source: Market Watch
-- The U.S. dollar spiked on Friday, rebounding off a near-15-month low on Friday after the closely watched U.S. jobs report topped expectations, which was seen as clearing a path for the Federal Reserve to tighten its balance sheet.
The turnaround for the greenback came after data showed 209,000 new jobs were added to the U.S. economy in July, beating estimates of a 175,000 reading. The unemployment rate fell to a 16-year low of 4.3%, down from 4.4% in June. See full story
U.S. labor market tightening
-- The number of Americans filing for unemployment benefits fell last week, pointing to a tightening labor market that likely keeps the Federal Reserve on course to announce plans next month to start reducing its massive bond portfolio.
Labor market strength was also underscored by another report on Thursday showing U.S.-based employers last month announced the fewest job cuts in eight months. But a moderation in services sector activity to an 11-month low in July put a wrinkle in the brightening economic outlook. See full story
Dollar falls against euro on ECB, Fed expectations
-- The U.S. dollar hit its lowest level against the euro in more than 2-1/2 years on Wednesday on doubts about another Federal Reserve interest rate increase this year and expectations for European Central Bank hawkishness.
The dollar index, which measures the greenback against a basket of six major rivals, touched a 15-month low of 92.548 and was last down 0.2 percent at 92.833. The dollar gained slightly against the yen and was last at 110.59 yen, hovering above a more than six-week low touched Tuesday of 109.91 yen. See full story
Treasury yields retreat after lackluster inflation
Source: Market Watch
-- Treasurys prices rose, pushing yields lower on Tuesday as a lackluster round of economic reports bolstered demand for government debt.
“I think the economy is just crawling along” said Mary Talbutt, a fixed-income portfolio manager at The Stanley-Laman Group.
Weak inflation can help support buying in Treasurys, while rising inflation can chip away at a bond’s value, particularly long-dated bonds. The lackluster, albeit healthy, data may also support wagers that the Fed will be reluctant to lift benchmark interest rates further in 2017. See full story
Dollar tumbles on month-end moves, Scaramucci departure
-- The U.S. dollar hit a more than 2-1/2-year low against the euro on Monday on month-end portfolio adjustments and uncertainty over the U.S. political outlook after the departure of White House communications director Anthony Scaramucci.
The dollar index, which measures the greenback against a basket of six major currencies, hit its lowest since early May 2016 of 92.786 after the news of Scaramucci's departure. The dollar also hit a more than six-week low against the yen of 110.22 yen. See full story
U.S. economy speeds up, wages lag
-- The U.S. economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment, but persistent sluggish wage gains cast a dark shadow over the growth outlook.
"Although growth is solid, the lack of wage pressure buys the Fed plenty of time, and works with a very 'gradual' tightening cycle," said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank in New York. "There is more here for the Fed doves than the hawks." See full story
Dollar rises from 13-month low
Source: Market Watch
-- The U.S. dollar rose on Thursday, gaining against major rivals in what analysts suggested was a mild consolidation following a sharp slide over recent weeks.
The ICE U.S. Dollar Index DXY, +0.55% which tracks the greenback against a half-dozen other major rivals, rose 0.2% to 93.91, bouncing off the 13-month low it touched on Wednesday, according to FactSet data.
The dollar turned broadly lower during Wednesday’s session as the Fed, led by Chairwoman Janet Yellen, was seen as striking a cautious note on inflation. See full story.
Dollar drops, treasuries rise
-- Treasuries rose, the dollar fell and U.S. stocks ended little changed after the Federal Reserve signaled that inflation remains persistently below its target even as the economy picks up steam. Oil surged to an eight-week high.
The Bloomberg Dollar Spot Index fell to the lowest in more than a year, while the 10-year Treasury yield slipped back below 2.3 percent after the Fed held rates steady and indicated it would start unwinding its balance sheet “relatively soon.” The S&P 500 Index erased gains in the final 15 minutes of trading. Results from AT&T Inc. to Boeing Co. bolstered other major indexes. Crude climbed above $48 a barrel as stockpiles shrank.
For the full story: https://www.bloomberg.com/news/articles/2017-07-25/stocks-extend-global-rally-on-earnings-bonds-fall-markets-wrap
-- Oil rose above $48 a barrel for the first time since early June in New York after an industry report was said to show U.S. inventories shrank by the most since September.
Futures traded as much as 5 percent higher, extending the regular session’s gains. Crude inventories declined by 10.2 million barrels last week in an American Petroleum Institute report released Tuesday, people familiar with the data said. That would be the largest draw since September if Energy Information Administration data confirms the drop on Wednesday.
For the full story: https://www.bloomberg.com/news/articles/2017-07-24/oil-holds-advance-above-46-as-saudis-pledge-deep-export-cuts
U.S. dollar, bond yields rise
-- The U.S. dollar rose from its lowest in more than a year and U.S. Treasury yields climbed on Monday as investors braced for news from this week's U.S. central bank meeting and possible hints on when the next interest rate hike is coming. The dollar index was last trading 0.2 percent higher at 94.002.
Many analysts and investors expect the Federal Reserve to say it will begin reducing its bond portfolio at its September meeting, but will await firmer indications on the timing of this effort at this week's two-day meeting, which begins Tuesday.
For the full story: http://www.reuters.com/article/us-global-markets-idUSKBN1A901O?il=0
Dollar slumps anew, world stocks stall
-- The U.S. dollar sank to its lowest in more than a year against key world currencies on Friday as investors assessed comments from the European Central Bank and obstacles to U.S. President Donald Trump's domestic agenda, while a global gauge of stocks was poised to snap a 10-session winning streak. Gains in the yen, gold and U.S. Treasuries pointed to moves into safe-haven assets rather than stocks that are considered riskier. Oil prices sank 2 percent. The euro built on sharp gains from a day earlier, rising to near two-year highs against the dollar and undermining European stocks, with Germany's DAX equity index falling 1.7 percent.
ECB President Mario Draghi said on Thursday financing conditions remained broadly supportive, and that the euro's appreciation had "received some attention." However, he did not cite that as a problem nor did he directly try to talk the currency down. Aside from the ECB comments, investors were also assessing whether Trump's recent legislative setbacks and developments involving a probe into Russian meddling in the 2016 U.S. general election were threatening his domestic plans for tax cuts and infrastructure spending. "Compounding the (weaker dollar) move is this latest news on the political front in the U.S. about the Russia investigation expanding to Trump’s business affairs,” said Alvise Marino, FX strategist at Credit Suisse in New York. “This is on top of the fact that Senate has not been able to pass anything meaningful on the healthcare front." See full story.
Dollar tumbles, euro nears two-year high
-- The U.S. dollar fell on Thursday, erasing an earlier gain as the euro jumped despite comments from European Central Bank President Mario Draghi, who left interest rates unchanged and pledged to continue the ECB’s asset-purchasing plan through December, “or beyond, if necessary.” The ICE U.S. Dollar Index DXY, which compares the greenback against a half-dozen other currencies, was down 0.6% to 94.25, having previous risen as high as 95.17 and having dropped as low as 94.09. The move extends the buck’s recent weakness, as the currency is down 7.8% thus far this year. At current levels, the dollar index is trading at its lowest level since August 2016.
“The market is already working off the assumption that the ECB will gradually phase out bond buying, with the program likely ending by the end of next year, possibly even the third quarter. This was made clear when the euro rallied despite the repeated insistence from Draghi that tapering wasn’t discussed and further analysis will be done in the Autumn,” Craig Erlam, senior market analyst at Oanda wrote in a note to clients. The euro has been one of the strongest-performing currencies this year, up 10.5% in 2017, including a gain of 1.4% thus far this week. See full story.
Oil closes at 6-week high
-- Oil futures settled at their highest level in about six weeks Wednesday after U.S. government data showed a sizable decline in U.S. crude stockpiles for a third week in a row. The August contract for West Texas Intermediate crude, which expires at Thursday’s settlement, tacked on 72 cents, or 1.6%, to finish at $47.12 a barrel on the New York Mercantile Exchange after trading as high as $47.26. September Brent crude traded on ICE Futures Europe rose 86 cents, or 1.8%, to $49.70 a barrel.
Both WTI and Brent oil settled at their highest levels since June 6, according to FactSet data. “Over the past 15 weeks, U.S. oil inventories have fallen a good 13 times, and in most cases, the falls were more pronounced than expected,” said Fawad Razaqzada, technical analyst at Forex.com. “The supply surplus is still there,” with the EIA data showing domestic crude-oil inventories holding ground near their upper half of the average for this time of year, but “the recent trend of destocking is nonetheless encouraging news,” he said. See full story.