Trump hit steepens curve; China's economy judders
July 15 (Reuters) -A look at the day ahead in U.S. and global markets from Mike Dolan
The shock shooting on Saturday of former President Donald Trump, who is seeking a return to the White House, is reverberating around world markets, with bets that the incident boosts his re-election chances steepening the Treasury yield curve and lifting stock futures first thing.
The full implications of the gun attack on Trump, who escaped with a minor injury to his ear to head to the Republican convention in Milwaukee on Monday, may take some time for the country and investors to absorb.
But for now the simple conclusion is that the shooting likely increases Trump's already considerable chances of returning to the White House after November's election.
For most analysts trying to parse that for markets, that ups the chances of tax cut extensions and higher trade tariffs - leading to even higher U.S. fiscal deficits, even alongside potential growth headwinds and intense political pressure on the Federal Reserve to ease as inflation continues to subside near term.
Some also suspect a possible withdrawal of U.S. support for Ukraine would also up fiscal pressures in Europe, who may then have to pick up the entire financial bill left by an American retreat.
With U.S. equities expected to benefit initially from tariffs, tax cuts and a possible spur to re-shoring of manufacturing, already record high stocks tend to be called higher on the increased prospect of a Trump win too.
So first thing Monday - with betting markets now putting chances of a Trump election win close to 70% - U.S. stock futures ESc1 were higher and the 2-to-30-year Treasury yield curve US2US30=RR briefly turned positive for the first time since January.
The two-year-old yield curve inversion from two to 10 years, meantime, also squeezed to narrowest since January at just 23 basis points.
Fed chair Jerome Powell speaks in Washington later.
With short-term yields still falling in the slipstream of last week's surprising disinflation news, and futures now fully priced for a first Fed rate cut in September, but long-term yields edging higher regardless, the curve was clearly riffing off the Trump incident.
Bitcoin's BTC= jump back above $60,000 for the first time in a couple of weeks was seen as another related reaction.
And most obvious of all perhaps, Trump Media & Technology Group DJT.O - majority owned by Trump - surged 63% to $50.3.
The dollar fallout more broadly is harder to figure - not least with Japanese markets closed for a holiday on Monday and following Thursday's latest round of yen-buying intervention by the Bank of Japan.
On balance, the dollar index .DXY and dollar/yen JPY= were stuck fast - with early dollar gains against Mexico's peso MXN= and China's yuan CNH= pared back a bit ahead of the open as full-year Fed easing speculation rose as high as 63 bps.
The euro EUR= and sterling GBP= held last week's gains, the latter at its best levels in a year against the dollar and in two years against the euro EURGBP=. Currency market volatility subsided, meantime, and three-month implied vol for the pivotal euro/dollar exchange rate EUR3MO= fell to its lowest since late 2021.
China's markets had a mixed reaction to another surprisingly poor set of economic readings there - second-quarter GDP growth fell to as low as 4.7%, far below the 5% that was both forecast by economists and also targeted by Beijing.
Although there was a slight beat in June industrial numbers, retail sales also missed expectations for the month.
Perhaps most alarming of all is the ongoing house price bust, with new home prices falling for the 11th straight month in May and the 3.9% annual decline being the steepest in nine years. Property investment fell 10.1% in the first half of 2024 from a year earlier, meantime, and home sales by floor area declined 19%.
Hong Kong stocks .HSI did lunge 1.5% lower and the yuan weakened slightly on interest rate cut speculation, but mainland China stocks .CSI300 eked out a small gain on hopes of more substantial government support.
China's ruling Communist Party starts its 'third plenum' this week. Reforms top the agenda and, amid a packed priority list, may include the most significant overhaul of the fiscal system in three decades to try to redirect income from Beijing to cash-strapped regional governments.
Back on Wall Street, the earnings season unfolds with Goldman Sachs GS.N and BlackRock next up after an underwhelming start from other big banks on Friday.
And Google parent Alphabet GOOGL.O is in advanced talks to acquire cybersecurity startup Wiz for roughly $23 billion, in a deal that would represent the technology giant's biggest acquisition ever.
Key developments that should provide more direction to U.S. markets later on Monday:
* New York Fed's June manufacturing survey
* US corporate earnings: Goldman Sachs, BlackRock
* Federal Reserve chair Jerome Powell speaks in Washington, San Francisco Fed President Mary Daly speaks; European Central Bank President Christine Lagarde speaks
* Euro group of euro zone finance ministers meet in Brussels
* U.S. Republican party convention starts
* US Treasury auctions 3-, 6-month bills
China's new home prices decline at fastest pace since 2015 https://reut.rs/466CEiI
China's Q2 GDP grows slower than expected https://reut.rs/4cIeKwO
US inflation gauges subside https://reut.rs/3zBjWUh
U.S. debt to keep surging over the next three decades https://reut.rs/4600SLK
JPMorgan's valuation lead over rivals looks secure https://reut.rs/4cOBafo
By Mike Dolan, editing by Timothy Heritage mike.dolan@thomsonreuters.com
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
