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Daily Briefing – Tuesday, August 15, 2017

US

As the North Korean chatter dies down, the VIX tumbled yesterday 18% and stocks rebounded as the week began. The S&P gained a percent and the Nasdaq 1.34%. The USD is in an uptrend this morning after the Fed’s William Dudley yesterday stated that he favors a December rate hike despite poor inflation readings.

 

Europe

EU banks are closed today for Assumption DayEuropean equities were also up on the unwinding of geopolitical tensions. The Eurostoxx led with a 1.5% gain followed by the Dax’s 1.26 and the FTSE lagging behind with a mere 0.6%, hampered primarily by energy prices. Meanwhile, yesterday’s industrial data from the Eurozone was disappointing (-0.6% MoM), and German Finance Minister Wolfgang Schauble yesterday criticized the ECB’s continuing low interest rate policy, saying he hopes for a hike soon – this as Germany gears up for a contested federal election.

 

 

Asia

Chinese indexes continued to recover overnight, the Nikkei adding 1.17%. Chinese gains were more muted with the Shanghai Composite eking out 0.22% and the Hang Seng 0.21. Yesterday China’s national Statistics Bureau revealed that steel output has increased 10%, signaling the country’s intention to flood foreign markets a day after US President Donald Trump informed his Chinese counterpart of his country’s intention to harness in unfair Chinese trade practices. This morning, China’s ministry of commerce warned that the US should act cautiously, since unilateral moves would harm companies from both countries – a wording most analysts are seeing as a warning. Japanese production this morning showed a better-than-expected 2.2% increase (MOM in June, and in Australia the RBA’s August meeting minutes paint a rosy picture that expects 3% GDP growth but a slower uptick in inflation and economic activity.

 

Commodities

Oil yesterday ended at $47.59 (WTI) – a 3-week low due to OPEC overproduction and a drop in Chinese demand; and gold marked its first low in 4 days, ending at $1290. This morning see futures at 47.60 and 1280, respectively.

 

Today’s Events

8:30 AM GMT UK: Retail Prices, and Producer & Consumer Price Indexes.
12:30 PM GMT US: Retail Sales, and Export & Import Price Indexes
8:30 PM GMT API Weekly Crude Oil Inventories
2 AM GMT (+1) China: Foreign Direct Investments

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