Market movers today
- Markets are still awaiting Fed governor Powell’s speech on Friday at Jackson Hole. In the meantime, we have US durable goods orders today, which is the best investment indicator of the US economy. Orders have increased strongly for more than a year now but with tentative signs of slowing momentum in recent months.
- There are no key market movers in the Nordics today.
The 60 second overview
US House advances President Biden’s economic plan: Yesterday, the US House approved a USD3,500bn budget framework to expand social care and agreed to vote on the Senate’s infrastructure package (USD1,000bn) by 27 September, see Reuters. There are still a lot of hurdles for the Democrats but our view is still that both the infrastructure package and the social care package will be approved this year.
German election: The CDU/CSU is now running behind SPD ahead of next month’s general election. A change of power would probably not lead to any major movements.
The Meishan terminal reopens: China’s second busiest port reopens after being shut down for two weeks due to COVID-19. This is positive for global trade. Global demand is solid, especially for goods, but freight rates are also high due to supply issues like these. As the vaccination pace is slow in many countries (also in other “production countries” in South East Asia such as Vietnam, Malaysia etc.), the pandemic is likely to create supply problems from time to time also in coming months.
Equities: US stocks edged up at new records yesterday, while the session in Europe was more muted. Sector performance very aligned between the two regions though, as investors continued to buy the dip in the past week’s sold sectors, including energy, consumer discretionary (the value part), materials, and banks. Defensive sectors, and especially health care, trailed. Despite the cyclical preference, VIX broke the downward trend and stalled at 17. It did not feel like it, but it was enough to take S&P to new highs, up 0.2%, Dow 0.1%, Nasdaq 0.5%, and Russell 2000 1.0%. After days of massive catch-up, Asian markets are in small declines this morning. US futures also point to a muted opening.
FI: The main event for the week is still ahead of us with Powell speaking on Friday at 16:00 CET (we also have ECB minutes on tomorrow). As such fixed income traded in a relatively tight range yesterday and ending broadly unchanged on the day.
FX: EUR/USD and EUR/GBP moved sideways yesterday. SEK has had a rather strong start to the week with EUR/SEK moving towards our 1M target of 10.20 from last week’s levels around 10.30.
Credit: Credit indices barely moved yesterday. iTraxx Xover tightened 1bp to close in 231½bp and Main tightened 0.2bp to close in 45.8bp. Both IG and HY bonds widened marginally.
