US Factory Contraction, UK Snap Election To Block Brexit Delay

US equity markets fell yesterday as ISM manufacturing data came in weaker than expected. Factory activity data contracted for the first time in 3 years. Investors appeared concerned that the trade war between the US and China could push the US economy into recession. Gold and then Japanese Yen which are often considered to be ‘safe haven’ assets rallied, as did the US Dollar.

Link: Bloomberg Article

Alternative view – JP Morgan says buy

According to JPMorgan & Co., adding risk back on is the right thing to do. Despite trade war concerns in the near term, the technical indicators and central banks’ monetary easing should outweigh the negative impact.

Link: Bloomberg Article

Brexit

UK Prime Minister Boris Johnson is expected to attempt to call a snap election today. This comes after a movement of opposition, including Conservative Party rebels, defeated the government with their motion to block a ‘no-deal’ Brexit and even force another 3 month extension to the deadline. Johnson, having vowed to take the UK out of the EU on the October 31 deadline, will argue that the country needs an election in order to proceed.

Link: Reuters

The day ahead

The key economic data for today is the services PMIs for August in Japan, China, and Europe. We should be on the lookout for July retail sales for the Eurozone, and in the US the July trade balance is due for release. The Bank of Canada’s interest rate decision and monetary policy statement is also due this afternoon.A number of central bankers are scheduled to speak today. The ECB’s Lane is due to speak in London at 12.00 BST. This afternoon, Fed speakers will include Williams, Evans, Bowman, Bullard, and Kashkari. Bank of England Governor, Mark Carney is also due to speak at 14.00 BST.

Traditional markets

Goldman Sachs (GS)— Goldman Sachs dropped nearly 3% as news broke that the bank’s global co-head of securities, Marty Chavez is departing.

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Backyard Hiker 8 months ago Member's comment

Sigh, I'm really sick of all this #Brexit talk. I wish the would either change their mind or leave the EU already.