Initial jobless claims in the US dropped by 11k to 239k in the week ending August 12 Continuing claims rose in the prior week to 1.72m but remain near pre-pandemic norms, suggesting the labour market remains in fairly good health despite the degree of monetary tightening the Federal Reserve has taken. Initial jobless claims have trended higher since the start of the year which aligns with the slowdown in hiring.
European Central Bank governor Martins Kazaks said the central bank was near the end of its hiking cycle and any upcoming rate hikes would be “really very small.” Inflation in the Eurozone has slowed from more than 10% at the end of 2022 to around 5.3% in its latest prints, still above target but at least trending in the right direction.
Egypt’s government has reappointed Hassan Abdallah as governor of the central bank for one year. Abdallah took over after the resignation of Tarek Amer last August. Since he was appointed last year in an acting capacity, Abdalla has overseen rate hikes from the Egyptian central bank in tandem with the country’s negotiations with the IMF for additional assistance.
Today’s Economic Data and Events
- 10:00 UK retail sales July: forecast -0.6%
- 13:00 EC CPI y/y July f: forecast 5.3%
Fixed Income
- US Treasuries traded in a choppy session with no clear fundamental signal. Anxiety over China’s economy and what support the government may extend tamed some risk appetite. Yields on the 2yr UST fell about 4bps to 4.9292% while the 10yr yield rose 2bps to 4.2741%.
- Bond markets in Europe sold off more heavily with gilt yields up 10bps to 4.739% while bund yields added 6bps to 2.705%.
- Emerging market bonds trended lower with a USD index slipping by 0.2% while global high yield bonds fell 0.3%.
FX
- Fading risk sentiment continued to weigh on currency markets with the dollar higher against most peers. EURUSD trended lower, settling near unchanged at 1.0872. GBPUSD managed to shake off the negativity with a 0.1% rise to 1.2747 while USDJPY reversed several days of moves higher, dropping by 0.4% to 145.84.
- Commodity currencies were uniformly weaker. USDCAD added 0.1% to 1.3546 while AUDUSD fell by 0.3% to 0.6404 and NZDUSD sank 0.2% to 0.5925.
Equities
- Global equity markets reflected the weakening risk sentiment. The Dow Jones index fell 0.8% overnight on pace with a similar decline in the S&P. The NASDAQ also moved lower, down 1.2%. European equities also showed no relief with the EuroStoxx index down more than 1.3% and the FTSE sinking by 0.6%.
- Asian equity markets are treading water in early trade today with the Nikkei and Hang Seng both near unchanged.
- The Tadawul was an outperformer overnight, ending its week up 0.5% while the DFM managed a marginal gain of about 0.1% and the ADX ended the day with a lower bias.
Commodities
- Oil prices managed to recover some ground overnight with a gain in Brent markets of 0.8% to USD 84.12/b while WTI added 1.3% to USD 80.39/b.
