The Market Today
Markets Await Trump Speech After Positive Week for Trade Developments
by Craig Dismuke, Dudley Carter
Small Business Optimism Inches Higher: The NFIB’s October report on small business optimism inched higher, up 0.6 points to 102.4, but remained near the lower end of the Trump era. Looking at the details, there was broad-based strength with improved outlooks for sales, the overall economy, expectations for hiring, expectations for compensation plans, and expectations for capital expenditures. Additionally, the index tracking the net percent of respondents expecting to make capital outlays over the next three to six months rose 2 points to 29%. While this remains weaker than some of the peak readings in 2018, it has gradually improved and points to business investment increasing in coming quarters.
President Trump to Speak at Economic Club, Fedspeak: President Trump is slated to speak at the New York Economic Club at 11:00 a.m. CT. Investors are a bit antsy about the content of his comments. Reports Monday indicated that he could announce a six-month delay in deciding if the U.S. will place tariffs on autos imported from the EU. At 11:55 a.m., Philadelphia Fed Bank President will also be speaking in New York with Minneapolis Bank President Kashkari scheduled at 5:00 p.m. in Madison, Wisconsin.
Markets Find Their Footing on Trade Hopes Ahead of President Trump’s Speech: Global stocks have found a firmer foothold Tuesday after concerns about trade and Hong Kong soured the mood on Monday. While the bond market was closed Monday for Veteran’s Day, U.S. equities finished mixed after violence in Hong Kong escalated over the weekend and investors remained concerned about mixed reports late last week on a possible rollback of U.S.-China tariffs.
European Yields Tick Up on Trade Hopes and Improvement in German Data: While the Treasury curve was little changed around 7 a.m. CT, European yields had generally inched higher. In addition to hopes for positive trade developments, a top survey of economic expectations in Germany recovered more than expected in November, from -22.8 to -2.1, to match its best level since April. However, the current assessment remained weak and near its lowest level since 2010. Brexit remains a focus and the British pound was holding below six-month highs following news the Brexit Party, which would potentially steal votes from PM Johnson’s conservatives, won’t contest more than 300 seats in the upcoming general elections. At 7:40 a.m. CT the 2-year Treasury yield was up 0.8 bps at 1.68%, the 10-year yield was unchanged at 1.94%, and stocks futures had edged into positive territory.
ICYMI – November 8, 2019 Weekly Market Recap: Despite a quiet economic calendar, yields rose sharply last week and stocks set multiple new records as developments raised hopes that the U.S. and China were marching toward a phase one trade deal. The sharpest move occurred Thursday after China disclosed, and a U.S. official later confirmed, that some tariffs would be rolled back once the agreement is signed. Despite some pushback from the White House on Friday that no final decision on tariffs had been made, all three indices ended the week at record highs. On the economic front, the most important report of the week was the ISM’s non-manufacturing index which improved more than expected. While the index remains much lower than in 2018, recent stability has been positive for the outlook. Click here to view the full recap.