The Breakfast Briefing: Global Stocks Fall As Prospects of Fed Rate Cut Recede

Ted

FYI: European stocks paused after a selloff in Asia on Monday, as the strength of the U.S. labor market led to doubts that the Federal Reserve would cut rates as much and as quickly as investors had hoped.

Asian markets were hit by Friday’s strong U.S. jobs data, which have dented investor hopes for a move to lower rates from the U.S. central bank at its next meeting in July.

At the same time, industrial production and trade data from Germany remained weak in May after April’s sharp contraction, suggesting that economic growth continues to slow in the heart of Europe.

The pan-continental Stoxx Europe 600 index and Germany’s DAX were helped by Deutsche Bank stock rising nearly 4% after it launched a new restructuring plan on Sunday, which aims to cut nearly 20,000 jobs and slash its balance sheet.

Chinese shares dropped, with stocks in Shanghai down 2.6% and Hong Kong’s Hang Seng down 1.7%. Japan’s Nikkei also lost 1%, mainly reacting to the drop in U.S. stocks on Friday and the view that fewer market-supporting interest-rate cuts will now come through.

U.S. stock futures also slipped, with the S&P 500 down 0.1% and the Dow Jones Industrial Average down 0.2%. Meanwhile, 10-year U.S. Treasury yields fell to 2.025%, from 2.044% on Friday. Yields fall as prices rise.
Regards,

In Europe, bond prices rallied and yields fell, heading back toward record lows set late last week. The German 10-year yield was minus 0.381% down 0.018 percentage points from Friday’s close, while French and Italian yields also fell.

Elsewhere in emerging markets, Turkey’s lira fell nearly 2% on concerns about central-bank independence, after President Recep Tayyip Erdogan dismissed the bank’s governor over the weekend.

In commodities, gold was up 0.6% at $1408.40 per ounce and Brent crude oil gained 0.33% to $64.44.
Ted

WSJ:
https://www.wsj.com/articles/global-stocks-fall-as-u-s-rate-cut-prospects-recede-11562563827

Bloomberg:
https://www.bloomberg.com/news/articles/2019-07-07/asian-stocks-set-to-slip-turkish-lira-tumbles-markets-wrap?srnd=premium

IBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-zscaler-stock-market-rally-cyberark-stock-boeing-737-max/

CNBC:
https://www.cnbc.com/2019/07/08/stock-market-us-futures-lower-as-jobs-data-dashes-fed-rate-cut-hopes.html

Reuters:
https://uk.reuters.com/article/uk-global-markets/global-shares-muted-as-prospect-of-sharp-u-s-rate-cut-fades-idUKKCN1U301F

U.K.
https://uk.reuters.com/article/uk-britain-stocks/tobacco-stocks-help-ftse-100-counter-easing-fed-rate-cut-bets-idUKKCN1U30OK

Europe:
https://www.reuters.com/article/us-europe-stocks/european-shares-edge-higher-deutsche-bank-rally-lifts-banks-idUSKCN1U30NH

Asia:
https://www.marketwatch.com/story/asia-stocks-slide-monday-in-wake-of-us-jobs-report-that-undercut-market-hope-for-aggressive-fed-rate-cut-2019-07-08/print

Bonds:
https://www.cnbc.com/2019/07/05/bond-markets-treasury-yields-tick-lower-as-investors-await-key-jobs-data.html

Currencies:
https://www.cnbc.com/2019/07/08/forex-markets-dollar-us-jobs-in-focus.html

Oil:
https://www.cnbc.com/2019/07/08/oil-markets-us-jobs-report-in-focus.html

Gold:
https://www.cnbc.com/2019/07/08/gold-markets-us-jobs-federal-reserve-in-focus.html

Cuirrent Futures:
https://finviz.com/futures.ashx

Sven

Finally reality set in - no inflation (more like deflation), no rate cut across the board. Besides how much more to cut when some European treasuries already having negative yields. Reality is the global economy has been sluggish this year, but recession is not here yet. Why worry?