The Market Today

Better Data Overnight; Quiet U.S. Calendar Ahead of Important Week

by Craig Dismuke, Dudley Carter


Important Week of Data Starts Off Slowly: This week’s calendar starts off on a slow note with the release of the MNI Chicago PMI and the Dallas Fed’s regional manufacturing activity report.  Both are expected to show slightly weaker activity.  The more important data kicks off tomorrow with the ISM Manufacturing index followed by Thursday’s Non-Manufacturing index.  Friday will bring the September labor data which are expected to show continued slowing in job growth but a still-low unemployment rate.  There are also eleven Fed speakers on the calendar this week, including New York’s John Williams (Wed.) and Fed Chair Powell (Fri.).


Chinese Manufacturing Shows Signs Of Stability In September: The week’s global trading session started mixed despite a couple of better-than-expected manufacturing surveys out of China and a new cycle-low for unemployment in Europe. While the official PMI survey of Chinese manufacturing activity contracted in September for a fifth month, the index topped expectations and move back closer to a neutral level. Separately, a private manufacturing PMI also exceeded expectations, rising unexpectedly to a 17-month high. However, in the face of continued trade uncertainty ahead of next week’s negotiations Chinese stocks closed down 1%. Reports last Friday indicated the White House was considering cutting back U.S. investment flows into China, although the U.S. Treasury said over the weekend there were no such plans “at this time.” Chinese markets will be closed for the remainder of the week for a holiday.

European Unemployment Falls Unexpectedly To New Cycle Low: Alongside the signs that manufacturing activity stabilized somewhat last month, unemployment in the Eurozone dropped unexpectedly to a new 11-year low of 7.4%. However, the stronger employment figure is swimming upstream against more powerful currents of slowing global growth, as well as continued deterioration in most other European economic metrics. A couple of hours after the surprise drop in European unemployment, data showed inflation in Germany, the region’s largest economy, slowed unexpected to an almost three-year low of 0.9% YoY. European stocks were stronger while bond yields had given up most of an overnight rise.

U.S. Markets Off To Quiet Start: Starting off an important week for the U.S. economic data, futures on the S&P 500 rose 0.2% and Treasury yields inched up from Friday’s final level. At 7:30 a.m. CT the 2-year and 10-year yield were 1.4 bps higher.


ICYMI – September 27, 2019 Weekly Market Recap: U.S. markets moved relatively little last week, frozen by conflicting signals from weaker economic data and political uncertainty that offset optimism created by positive developments on trade. A slate of economic data out of Europe showed activity in the world’s second-largest economy (in the aggregate) remains weak amid increased global uncertainty. The signals from reports out of Asia weren’t much better as inflation in Japan remained soft and industrial profits in China contracted and remained weak. In the U.S. Markit PMIs were mixed with the important services index weaker-than-expected, and business spending indicators remained sluggish. The housing data continued to reflect positive effects from lower mortgage rates. Consumer signals were mixed with the Conference Board’s confidence index weaker than expected and spending disappointing expectations. However, income growth was solid and jobless claims remain low showing the labor market remains supportive of consumer spending. Increasing the level of political uncertainty, democrats in the House announced a formal impeachment inquiry into President Trump’s actions related to a phone call with Ukrainian President Zelensky. Click here to view the full recap.

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