The Market Today

Week of Disappointing Data Depresses Economic Outlook

by Craig Dismuke, Dudley Carter

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No Data Today, Economic Sentiment Falling: There are no economic reports on the calendar today.  The data last week were discouraging enough (more below), and combined with slowing credit card spending data and still-rising COVID-19 cases; the overall economic tone has turned more dour.  Economists are once again lowering their forecasts for 3Q and full-year growth.  Goldman Sachs Group reduced their 3Q GDP forecast from 5.5% to 3.5%.  The September Bloomberg Survey of Economists is scheduled for release on Friday.


Treasury Yields Add to Post-August-Jobs Gain: Global equities rose in tandem Monday while U.S. investors were on holiday. While Asian stocks extended the positive trend overnight, European indexes have pulled back and U.S. futures were earlier mixed and little changed. Chinese markets led gains in the East after better-than-expected import and export data for August added a positive data point to a recent string of disappointing activity indicators. However, Europe’s popular ZEW survey of investor expectations for economic growth declined for a fourth month in September, from its highest level in more than 21 years to its lowest level since April 2020. Concerns that Delta’s spread may be slowing the global expansion has become a theme in the economic data over the last month and a worry for investors. U.S. equities dipped last Friday after the official payroll report showed the latest virus wave impacted hiring last month (more below). While equity futures traded tepidly again overnight, Treasury yields continued higher, caught up in a broad, daily global rise. Absent a specific catalyst, separate reports cited Thursday’s ECB meeting as well as global supply pressures ahead of auction activity this week, including sales of 3-, 10-, and 30-year Treasury debt. At 7:20 a.m. CT, the 2-year yield had inched up just 0.2 bps to 0.21%, but the 10-year yield had risen 4.1 bps to 1.36%, its highest yield since mid-July.


ICYMI – September 3, 2021 Weekly Market Recap: Markets opened for trading last week with investors focused on U.S. airstrikes in Afghanistan over the weekend and Hurricane Ida’s landfall in Louisiana on Sunday. The attention quickly turned, however, to the weekly economic calendar which started and ended in underwhelming fashion. Following some weak reports out of China pointing to sharply slower activity in August, the Conference Board’s Consumer Confidence Index tumbled by the most since April 2020 to a six-month low. A day later, the ISM’s Manufacturing Index beat expectations with an unexpected rise but was surrounded by a surprisingly weak ADP payroll estimate and an abysmal report on new auto sales. With a shortage of semiconductors hampering car inventories, auto sales declined to a 14-month low and are now 30% below April’s peak. Although Thursday’s claims data pointed to continued improvement, Friday’s nonfarm payroll report disappointed even the most dour economist’s forecast. The 235k jobs added in August came up well short of the 733k gain expected and marked a drastic slowdown from the average pace of around 1 million jobs added in June and July. Hiring slowed across most sectors, but leisure and hospitality and education accounted for majority of the lost momentum. Leisure jobs were flat in August, a severe slowdown from a three-month average pace of 377k and potential sign of Delta’s impact. The education sector added just 14k jobs compared with an average of 272k in June and July. Away from the hiring tallies, unemployment fell from 5.4% to 5.2% while year-over-year wage growth rose unexpectedly from 4.1% to 4.3%. The loss of momentum for hiring makes a strong signal about tapering at the Fed’s September meeting highly unlikely. Click here to view the full recap.

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