Market Insights 9/9/2019

U.S. equities finished mixed after paring early gains following back-to-back weekly gains.

Treasury yields were higher, showing little reaction to the afternoon release of consumer credit, and crude oil prices gained ground, while the U.S. dollar and gold were lower.

…..The Markets….

The Dow Jones Industrial Average rose 38 points (0.1%) to 26,836

The S&P 500 Index was nearly unchanged at 2,979

The Nasdaq Composite declined 16 points (0.2%) to 8,087

In moderate volume, 890 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq

WTI crude oil moved $1.33 higher to $57.85 per barrel and wholesale gasoline was up $0.01 at $1.58 per gallon

The Bloomberg gold spot price declined $5.62 to $1,501.20 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% lower at 98.29

Consumer credit surges, economic calendar set to heat up

Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $23.3 billion during July, the most since late 2017 and well above the $16.0 billion forecast of economists polled by Bloomberg, while June’s figure was adjusted downward to an increase of $13.8 billion from the originally reported $14.6 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $13.3 billion, a 5.3% increase year-over-year, while revolving debt, which includes credit cards, rose by $10.0 billion, an 11.2% y/y rise.

Treasuries were lower, as the yield on the 2-year note rose 6 basis points (bps) to 1.58%, the yield on the 10-year note advanced 8 bps to 1.63%, and the 30-year bond rate gained 9 bps to 2.11%.

U.S. stocks pared early gains after notching a second-straight weekly rally last week, and crude oil prices were higher, though the U.S. dollar and gold retreated a bit. The global markets have been supported somewhat by resurfaced trade optimism as the U.S. and China said talks will resume early next month, and U.S. economic data has been relatively positive, even after Friday’s mixed August non-farm payroll report. Finally, some peripheral geopolitical risks have cooled somewhat as Hong Kong withdrew a controversial extradition bill that had sparked prolonged protests, Italy’s new government took shape and U.K. parliamentary votes cooled concerns about a no-deal Brexit.

Europe mixed on data and Brexit uncertainties, Asia mostly higher

European equities were mixed, as the markets digested some relatively upbeat economic data in the region, along with some softer-than-expected Chinese trade figures, while U.K. Brexit uncertainty remained. German July exports unexpectedly rose, along with industrial/manufacturing production figures out of the U.K. The U.K’s July GDP came in a bit stronger than projected and Eurozone investor confidence improved more than anticipated for September, but still remained in negative territory.

The British pound extended a recent rally on the data and festering Brexit uncertainty after the recent defeats in parliament for Prime Minister Boris Johnson that tamped down no-deal Brexit fears ahead of the October 31st deadline, but fostered heightened uncertainty regarding the political path forward. The euro rose versus the U.S. dollar and bond yields in the region were mostly higher, but some key rates remain in negative territory.

Stocks in Asia finished mostly to the upside, with global sentiment continuing to find support from relatively eased trade concerns as the U.S. and China said talks will resume early next month. Stocks in mainland China rose, even after some softer-than-expected trade data for August over the weekend, while those traded in Hong Kong finished little changed, as did shares in Australia.

Japanese equities advanced, with the yen a bit choppy, and following the release of the country’s Q2 GDP report, which showed growth slowed to a 1.3% quarter-over-quarter annualized rate, matching forecasts, and from the 2.2% pace posted in Q1.