News

US Stock Indices Edge Higher as Yields Surge

Equities

Major US stock-index futures extended positive rally as we kicked-off a new trading week, supported by the recovery of US Treasury yields. The stock market witnessed a heavy sell-off last week as US 10-year yields dipped below the 2-year yields for the first time since 2007. As a result, investors were seen fleeing the stock market and rushing to safer assets as a yield curve inversion is usually an early warning of a possible recession. However, the yields recovered since late Friday, and during the weekend President Donald Trump said that they are doing very well with China and talking, helping investors to regain their risky attitude. The Dow Jones Industrial Average futures edged higher to 26158, the S&P 500 futures rose to 2919, and the Nasdaq futures raced higher to 7698.

USD

The dollar index which measures the greenback against a basket of major currencies settled higher for the fourth consecutive day closing at 98.20. The recent rebound in the US economic figures provided support to the dollar and has put the US economic outlook in a better place against rivals. The deteriorating economic activity in the Eurozone, which raised the chances of aggressive monetary policy easing by the European Central Bank in the coming meeting forced investors to favor the dollar to euro. The EURUSD tumbled to a two-week low of $1.1066 ahead of crucial economic data this week. The USDJPY continued to trade in a tight range between 105.70 and 107.00 as investors awaited fresh fundamental drivers that could lead them to safety again.

Metals

Gold prices dipped as the dollar edged higher and US treasury yields surged. The price of a gold ounce fell to $1505, the price of a silver ounce dropped to $16.94, and palladium rose to $1460.

Oil

Oil prices inched higher during the Asian session as the attack on a Saudi oil field on the weekend revived investors’ concerns over oil production and supplies. An oilfield in eastern Saudi Arabia was attacked by a drone on Saturday. Investors are afraid that such attacks could re-escalate the geopolitical tensions and put oil output under threat. The West Texas Intermediate crude oil futures rose to a high of $55.74, and the Brent crude futures rallied to $59.61.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EU

CPI (YoY) (Jul)

1.1%

1.1%

9:00

EU

Core CPI (YoY) (Jul)

0.9%

0.9%


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