Written Commentary
STOCK INDEX FUTURES
Global equity markets were generally lower overnight with US markets showing relative strength, especially European markets which suggests the US market may have become the leadership market again. However, the KOSPI (the South Korean tech dominated index) managed to post a gain of 1.92% providing a slight injection of optimistic AI/chip sector investment interest to the last US trading session of the week. With the S&P this morning holding just under yesterday’s aggressive range up recovery highs, bullish interest from yesterday spills over into today. For, the markets will have a key junction today following the US nonfarm payroll report with most financial markets hyper focused on the ebb and flow of US interest rate hike prospects.
CURRENCIES
In retrospect, the slide in the dollar this week was clearly not the result of a removal of war premium and was certainly not the result of an improved view toward the US economy. In fact, this week ISM manufacturing PMI, JOLTS, construction spending, and S&P global services PMI all posted weaker than expected results which in turn deflated the prospects of a September 16th US rate hike thereby justifying this week’s high to low washout in the dollar of 100 points.
TREASURY FUTURES
While US economic data has managed to generally hold up, we would label the US economy as weak with the look of an economy in the process of further slowing. Therefore, today’s US nonfarm payroll report (expectations for a 56,000 gain) certainly offers the potential for emergence of a new focus for the trade. Unfortunately for the bull camp, US treasury prices have not been responding to classic scheduled data with the bearish psychology of “rising rates” a fixture.
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