Markets slow as we await progress on next U.S. Covid-19 stimulus package, reports Adam Button.
If you didn't know it is summer, NASDAQ was up 0.2% last week, the smallest +(-) weekly change of the year, and the S&P 500 posted its smaller weekly change in over 3 1/2 months. This is typical dog days of summer markets.
Something will have to change to get U.D. stimulus discussions moving and that might be a shudder in financial markets. The U.S. Dollar Index is on the backfoot, but metals remain in correction mode. Watch the latest Virus developments below.
U.S. retail sales beat expectations in July but at a slower pace than June, while the British pound (GBP) was the strongest performer last Friday and silver the biggest loser, highlighting once again that inverse GBP/XAG relation between the two that Ashraf has often tweeted about. Below is the chart of mainly consistent upside economic surprises, while crude oil remains hesitant in the short-term, but could be set for a break-out in autumn.
Still No Stimulus
Another week has gone by and U.S. policymakers are deadlocked on further stimulus. White House economic advisor Larry Kudlow said that executive orders – to some extent – fill the need for a second stimulus package.
That comment sent a small shudder through the market, but it was a soft bond auction later that sparked a U.S. dollar bid and some stronger risk aversion.
The number of trend changes this week has been notable – bonds, precious metals, and USD. Yet the broader theme of complacency around the recovery, the election and stimulus remain the dominant theme.
Initial jobless claims placated some of the worries on Thursday as they fell to a 21-week low of 963,000 compared to 1.1 million expected. However, there are still 28.2 million Americans on some form of unemployment benefit and the absence of the $600 per week bonus has to be hurting consumers at the moment.
Keep an eye on Covid19 developments as the number of cases in France rebounds strongly, while Germany warns about Spain and Greece and in the meantime deaths in Florida jumped back up. Some express puzzlement at how the rise in new cases is not causing new deaths, which could suggest a sign of world-wide immunity.
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