US equity index futures climb to undo last week’s limited losses for the (w/w -0.2% to 6,643) and (w/w -0.3% to 24,503) while the (w/w +0.1% to 46,247) avoided a red finish as prints were as anticipated (see Data below) helping risk appetite recover last Friday, with investors noting the extent to which the AI trade can run, recent fresh tariff announcements, the approaching government shutdown deadline, and crucial jobs data this Friday.
Treasury yields up w/w but not on the furthest end of the curve, and market pricing (CME’s FedWatch) remains not too far off fully pricing in a 25bp cut in the October meeting and via majority sees another reduction in December.
Stocks: Costco Can’t Catch a Break, Boeing Gets a Massive Order, but EA Outperforms as it May Go Private
– Mixed session for chipmakers but Intel (NASDAQ:) (+4.4%) up again as investor optimism builds on reports it’s seeking partnerships/investment from and Apple (NASDAQ:)
– Shares of furniture stocks manage to recover off a red open following the 30% tariff announcement, while 25% tariffs on heavy trucks aid PACCAR (NASDAQ:) (+5%)
– Kenvue (NYSE:) shares closed 1.6% higher on Friday, enjoying an upgrade out of Rothschild but a mountain to climb to undo big losses this month on the government’s link of its Tylenol to autism when used by pregnant women
– Shares of Boeing (NYSE:) climb 3.6% following a massive Turkish Airlines order as well as FAA airworthiness certificates for some of its 737 MAX and 787s
– Strong close for shares of Electronic Arts (NASDAQ:) up 14.9% on WSJ report its close to sealing a deal to go private
– Meme stock movers: GoPro (NASDAQ:) (+4.1%), Krispy Kreme (NASDAQ:) (+5.2%), Opendoor (NASDAQ:) (-3.1%), BlackBerry (NYSE:) (+6.7%), GameStop (NYSE:) (+4.6%)
– Earnings:
– Costco (NASDAQ:): earnings and revenue beat with significant gains in both e-commerce and membership income; yet shares closed 2.9% lower
Commodities: Another Record High for Gold, and Another Outperforming Move for Silver
– Record high for this morning, breaching $3,800 as government shutdown risks take more attention and weakens in the FX market, with better percentage gains for reaching $47; gold/silver ratio resumes its decline breaking beneath 81 and at lows unseen since October
– prices (WTI) close the gap to get back above $65 but traders cautious following unconfirmed report OPEC+ likely to approve another output increase for November, as well as Iraq Kurdistan region’s resumption of oil exports over the weekend; weekly rig count data out of Baker Hughes shows number of US oil rigs rise by six to 424
FX/Central Banks/Crypto: Dollar No Longer in the Driver’s Seat
– Weekend gains for with another climb this morning to briefly breaching $112K with hovering near its support-turned-resistance level, and ’s mid-term support level holding for now
– back in the 97s as its short-term resistance level holds and traders look to whether a government shutdown can be avoided as well as more data this week, and suffers most against the yen this morning taking beneath 149
– Federal Reserve’s Bowman that a weakening labor market suggests the central bank could be “at serious risk of already being behind the curve” with continuing conditions potentially requiring adjusting policy “at a faster pace and to a larger degree going forward”, and Barkin that they need “to move a little bit toward employment mandate” given “looks a little shakier” while inflation is “better” with risks to both limited
– European Central Bank’s Makhlouf said they’re “near the bottom” of their easing cycle, though ought to remain vigilant due to tariff impact yet to “feed through”
– Bank of England’s Dhingra that they should avoid being “overly cautious about cutting interest rates” as “effects of shocks” causing high UK will “fade”
Market Sentiment (w/w): Heavy Buy and Rising in Gold
– Indices: An increase w/w for long bias in all four US equity indices and in heavy buy territory for the S&P (73% from 67% last Monday), Dow (66% from 56% a week ago) and Russell (76% not far off extreme buy) while shifts in the Nasdaq (from a slight sell 53% at the start of last week to a majority buy 59% at the start of this week)
– Commodities: Heavy buy and rising in gold (67% from 63% a week ago) as long traders who took profit look for a new entry point, with a similar story playing out in silver (69% from 68%), while a significant unwind occurred in WTI (71% from 88% last Monday) but cooled later in the week
– FX: Raise their long bias in (from a slight buy 51% last Monday to a majority long 57%) and (64% from 60%) while shift to the middle in USD/JPY (from a majority long 60% a week ago)
CoT Speculator Sentiment (w/w): Trimming Their Sell Bias in Indices While Remaining Extreme Buy in Gold and Silver
– Indices: Reduce their net sell bias in the S&P (64% from 67%), (71% from 73%) and especially the Dow shifting (from net short 71% to the middle) while raise their net long bias a notch in the Nasdaq (58%) and more so the Nikkei (81%)
– Commodities: Remain in extreme buy territory but take it down a notch in gold (to 83% from 84%), hold in silver (at 78%), and raise it in WTI (67%)
– FX: Heavy buy and holding in EUR (65%), on the verge of shifting in GBP (slight sell 51%), and raising their net long bias in JPY (to 65%; i.e., heavy sell 65% USD/JPY)
Data: PCE Pricing Data In Line, But Spending and Income Both Manage to Beat Forecasts
– US for August in line with forecasts up 0.3% m/m for headline with 0.2% again, and y/y growth of 2.7% and 2.9%, respectively; personal spending (+0.6%) and income (+0.4%) for the same month a notch above expectations; UoM’s revised figures for reduced to 55.1 with inflation expectations also trimmed (1Y from 4.8% to 4.7%, 5Y from 3.9% to 3.7%)
– Canadian in July up 0.2% m/m
Today: Can An Agreement Be Made to Avoid the Government Shutdown?
– More FOMC members speaking, pending home sales (6 pm Dubai time)
– US President Trump to meet lawmakers regarding avoiding a government shutdown
This Week: NFP, PMIs, and Trying to Avoid the Government Shutdown
Busier in the Asian session tomorrow with Chinese PMIs and an expected RBA hold on rates, with manufacturing PMIs from the rest on Wednesday and EZ preliminary pricing data, the weekly US claims on Thursday, and both and the market-moving on Friday. Let’s not forget the government shutdown deadline.