Dollar Mixed While U.S. Stocks and Treasury Yield Decline

August 12, 2019

World financial markets began this week in a risk-averse state of mind over the trade dispute between China and the United States, softer global growth and inflation, and the geopolitical risk posed by street protests in Hong Kong.

  • Presidents Trump and Xi seem unprepared to find common ground on a trade agreement this year or next.
  • Consumer prices figures reported today revealed on-year inflation of minus 0.3% in Portugal and Cyprus and only 0.4% in Denmark. Analysts continue to revised down projected economic growth for Europe and the United States.
  • Many pundits believe that Beijing officials will not repeat replicate the Tiananmen Square massacre in Hong Kong, as such an approach carries much greater political and economic risks this time compared to 1989. But one never knows because alternative resolutions as yet have not emerged.

The ten-year Treasury yield dropped six basis points to 1.68%. That’s just 30 basis points above the record low hit in July 2016. The 10-year German bund slid a basis point.

Japan, Singapore and India were closed for holidays.

The DJIA is poised for a 3-digit drop at the open. Share prices are down 0.8% in Spain, 0.2% in Germany, and 0.4% in France and Great Britain. China’s market rebounded 1.5%, however.

A 0.5% rise of the price of gold and a 0.4% slide in West Texas Intermediate crude oil are consistent with today’s risk aversion motif.

The dollar is unchanged against the euro and otherwise mixed, with gains of 1.4% against the peso, 0.4% versus the Australian dollar, and 0.2% vis-a-vis the Swiss franc but losses of 0.9% against the yen, 0.5% relative to sterling and 0.1% versus the yuan.

Ireland’s construction purchasing managers index fell 1.7 index points to a 71-month low of 51.4 in July.

New Chinese yuan lending was smaller in July than forecast and at a 3-month low. Chinese M2 money growth from a year earlier also decelerated more than expected, dropping 0.4 percentage points to 8.1% last month.

The U.S. federal budget deficit in July will be reported later today.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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