Another day, another extremely tight range of overnight futures trading - with spoos stuck in a 1% range for the past two weeks, it feels as if nothing can push the index away from its massive gamma gravity around 4,400, although today's CPI - if it shocks either higher or lower relative to expectations - may be just the trigger that breaks this boring rangebound market. 10Y Yield rose as high as 1.375% as the dollar tracked the move higher.
Amid muted trading volumes, S&P futures dipped slightly lower from a fresh record ahead of data out today showing U.S. consumer prices probably jumped again in July; Nasdaq futures fell on Wednesday, while Dow indicators rose slightly as investors swapped heavyweight technology stocks with economically sensitive sectors following the approval of a U.S. infrastructure bill. At 745am ET, Dow e-minis were up 2 points, or 0.1%, S&P 500 e-minis were down -5 points, or 0.11%, and Nasdaq 100 e-minis were down 31points, or 0.2%.
Coinbase Global rose in pre-market trading after reporting second quarter results, while biotech firm Cohbar Inc. surged on results from a treatment study. Energy firms Exxon, Schlumberger, Marathon Oil, Occidental Petroleum and Halliburton fell between 0.6% and 1.5%, tracking crude prices. Heavyweight FAAMG stocks edged lower, weighed down by a rise in Treasury yields. Heavy industrials Caterpillar and Deere, construction materials suppliers Vulcan Materials, and Nucor Corp rose between 0.4% and 1.9% in premarket trading, adding to sharp gains in the previous session on hopes of reaping gains from infrastructure projects. Here are some of the other most notable premarket movers today:
- Airline stocks are lower, with investors spooked by a Southwest Airlines (LUV) warning that a recent surge in Covid-19 cases is weighing on U.S. bookings. Southwest shares slip 2%.
- Barnwell Industries (BRN) surges 9% after the company reported a 28% increase in third quarter revenue.
- FuboTV (FUBO) shares rise 12%, with Roth saying the streaming company’s 2Q results delivered a solid beat and raise.
- Good Times Restaurants (GTIM) surges 27% after saying revenue rose to $33.9m in the fiscal third quarter, up 39% from a year ago.
- Mogo Inc. (MOGO) rallies 20% after raising its forecast for fourth-quarter subscription and services revenue growth.
- ON24 (ONTF) shares drop 20% after the company gave an outlook that analysts said was weak, prompting firms to slash their price targets.
- PubMatic (PUBM) gains 7% as analysts are positive on the digital advertising software company after it reported second-quarter results and raised its full-year revenue view.
- Splunk (SPLK) gains 2% after being upgraded to buy at UBS, which writes that the application software company is showing signs of improved stability.
- Upstart (UPST) soars 22% after the artificial intelligence lending platform forecast full-year revenue that topped expectations.
- Vine Energy Inc. (VEI) gains 7% after Chesapeake Energy Corp. agreed to acquire the company in a deal valued at about $2.2 billion.
- WW International (WW) plunges 24% after it offered year forecasts that were well below analysts’ projections and second- quarter results that also fell short.
- Wix.com (WIX) shares are down 9% after the company cut its full-year revenue outlook.
Data due at 0830 a.m. ET will likely show U.S. consumer prices rose 5.3% year-on-year in July, according to a Reuters poll, and at a time when two U.S. central bank officials said inflation was already at levels that satisfy one leg of a key test for tightening policy. Inflation has dictated market sentiment in the past few months, with market participants fearing higher price pressures could force the Fed to pare back its ultra-loose accommodative stance sooner than expected.
As DB's Jim Reid notes, "today should be a big day, however the evidence from recent big CPI prints is that the market doesn’t believe it’s sustainable so it might take a lot to shake things up today. For the record our US economists are expecting a +0.5% m/m increase in headline CPI and a tick down to 5.3% y/y, after last month came in at +0.9% m/m, which took the y/y reading to +5.4%. They expect a +0.4% m/m and +4.3% y/y core print after June was +0.9% m/m and +4.5% y/y. This follows three straight months of higher-than-expected headline price increases, +0.9% (+0.5% expected) in June, +0.6% (+0.5% expected) in May, and +0.8% (+0.2% expected) in April. The market saw Treasury yields move more than 5bps on the day of the last three CPI prints. US 10yr Treasury yields rose +5.2bps on last month’s release, and back in May, when the April data surprised to the upside for the first time, yields rose +7.0bps. On the other hand, yields fell -5.9bps the month in between when the data was more in-line with expectations. Yields have also fallen in the days following recent prints as markets haven’t been convinced. Let’s see if anything changes today. The breakdown will be very important so let’s see if more of the transitory inflation filters into non-covid related sectors."
“This is important in terms of short-term sentiment,” said Giles Coghlan, chief currency analyst at HYCM. Investors, however, will then turn to whether the Fed will signal timings on tapering stimulus at a meeting of central bankers in Jackson Hole, Wyoming, on Aug. 26-28, Coghlan said. U.S. non-farm payrolls figures due in September could also influence tapering if they are particularly strong.
"The big question at the moment is are we at peak CPI or is there more in the tank?” said Michael Hewson, chief markets analyst at CMC Markets.
He added that a strong figure could trigger a spike in bond yields and send jitters through stocks. Investor focus on U.S. price data comes as Federal Reserve officials talk up the prospects of unwinding some of the stimulus that has helped the recovery from the pandemic. Chicago Fed President Charles Evans said he expects substantial further progress later this year on the central bank’s tapering intentions.
In Europe, the Stoxx 600 index hit a new record high for an eighth consecutive session amid strong earnings from the likesof ABN Amro Bank NV and Stop & Shop owner Royal Ahold Delhaize NV. Here are some of the biggest European movers today:
- ABN Amro shares gain as much as 5% after the Dutch lender posted 2Q results that will likely spark consensus upgrades, Jefferies writes.
- Avast shares rise as much as 4.7% in London after NortonLifeLock agreed to buy the company in a cash and stock deal valued at as much as $8.6b.
- Spirax-Sarco shares advance as much as 6.7%, hitting a record high, following 1H results that Jefferies said look “good.”
- Thyssenkrupp shares slide as much as 7.5% after 3Q results; while adj. Ebit was just above consensus average, FY free cash flow guidance was a little worse than before, according to Baader.
- Quilter shares decline as much as 4.9% as the U.K. wealth manager gives a cautious outlook alongside first-half results.
- Deliveroo shares reverse earlier gains to trade as much as 4.7% lower after results, with Citi flagging comments over signs of moderating growth in Europe, and “conservative” guidance from the food delivery company.
Earlier in the session, Asian stocks were steady as cyclical shares benefited on Wednesday from an increase in bond yields, with traders turning their focus to key inflation data from the U.S. The MSCI Asia Pacific Index was little changed after tech stocks dragged the gauge back from a gain of as much as 0.4%. Energy and financial stocks were higher, and the passing of a $550 billion infrastructure plan by the U.S. Senate boosted construction-related shares. In a relatively quiet trading day in Asia, many investors were waiting for the report on U.S. consumer-price inflation on Wednesday. The release will help investors gauge the Federal Reserve’s tapering intentions as officials meet at the Jackson Hole conference later this month. U.S. 10-year Treasury yields breached the 1.37% level in their sixth straight days of gains ahead of the inflation report. The Asian stock benchmark appears to be on better footing in August, with a 1.8% advance so far, following two straight monthly declines. While the spread of the delta variant of Covid-19 is taking a toll on economies in the region, the wild swings in Chinese shares triggered by new regulations have calmed even as investors continue to try to figure out Beijing’s next policy change. READ: Real-Time Data Suggest Asia’s Economy Already Feeling Delta Hit “We expect policy risks to be near-term overhang, so it doesn’t really change our long-term positive view about structural growth,” Lilian Leung, portfolio manager for Greater China equities at JPMorgan Asset Management, told Bloomberg Television. The cyclicals-heavy Japanese stock indexes were among the best performers in Asia Pacific, while Singapore equities declined even after the country raised its annual economic-growth forecast to between 6% and 7%. Indonesia’s stock market was closed for a holiday.
Japanese equities rose for a fourth straight day, as cyclicals outperformed following a rise in U.S. bond yields. Banks and automakers were the biggest boosts to the Topix, which advanced 0.9%. Fast Retailing and Daikin were the largest contributors to a 0.7% gain in the Nikkei 225. U.S. tech stocks slumped in contrast to a broader gains in the overall market Tuesday, exposing lingering concerns about the ability of the economy to weather less stimulus and rising Covid outbreaks. Treasury yields rose. The Senate passed a $550 billion infrastructure plan that would represent the biggest burst of spending on U.S. public works in decades. “U.S. long-terms yields, which have been extremely low, have finally recovered to around 1.35%, and cyclical Japanese equities are likely to get a lift,” said Mitsushige Akino, a senior executive officer at Ichiyoshi Asset Management. “But given the weakness in semiconductor-related stocks in the U.S., upside for the local chips sector, which is representative of value stocks, will likely be limited.”
Most Indian shares ended lower as small and mid-sized securities fell for a third day on concern that new measures by local bourse BSE Ltd. would hurt the outlook for penny stocks. The S&P BSE Sensex dropped less than 0.1% at the close, with 17 stocks down and 13 up. The NSE Nifty 50 Index ended flat. Ten of the 19 sector sub-indexes compiled by BSE Ltd. slipped, led by a gauge of healthcare companies. The BSE S&P SmallCap Index ended 0.8% lower, following an intraday slump of as much as 3.3%. A midcap measure declined 0.2%. Both gauges trimmed earlier losses after BSE clarified it will introduce price bands on the movement of certain stocks based on their performance over a period of six months, one year, two years and three years. The bourse’s proposals have sparked concerns it may introduce similar rules across mid and smallcap space. The selling was sentiment-driven, said Kishor Ostwal, managing director of Mumbai-base CNI Research Ltd. “Such rules disturb the price discovery mechanism in the market, which investors don’t like,” he said by phone
In Australia, the S&P/ASX 200 index rose 0.3% to close at 7,584.30, a fresh record. Banks contributed the most to the benchmark’s advance after CBA reported a surge in earnings. Australia’s largest lender also unveiled a record A$6 billion share buyback plan and boosted its dividend. Iress was among the top performers after saying it plans to back EQT’s sweetened takeover proposal. Megaport was the worst performer after broker downgrades. In New Zealand, the S&P/NZX 50 index fell 0.1% to 12,748.07.
In rates, Treasuries were mildly cheaper across belly of the curve as market awaits 10-year auction that follows solid German 10-year sale. Yields were higher by up to 1.5bp across 7-year sector, cheapening the 2s7s30s fly 2.4bp on the day and to widest levels since July 7; 10-year yields around 1.37%. In Asia, both Aussie and Japan sales were soft overnight. Traders will focus on July CPI print, with inflation expected to remain hot and little sign that households are balking at paying more for goods and services. U.S. auctions continue with $41b 10-year note sale at 1pm ET, and Thursday’s $27b 30-year concludes this weeks sales.
In FX, the dollar headed towards this year’s high against the euro and achieved a five-week peak against the yen ahead of the CPI data. The U.S. currency rose to 110.72 yen, and the euro eased to $1.1714. The greenback was supported by rises in longer and shorter dated treasury yields, which reached their highest levels since mid-July with yields on benchmark 10-year Treasury notes at 1.3675%.
In commodities, Crude oil prices tumbled below $70 a barrel, pressured by a CNBC report that the White House will call on OPEC and its allies to boost production in an effort to combat escalating gasoline prices. WTI was down 1.3% at $67.43 a barrel, while Brent crude fell 1.16% to $69.81.
Elsewhere, Bitcoin was back above $46,000 even as the Senate passed an infrastructure bill containing broad oversight of virtual currencies.
Looking at the day ahead now, outside of the aforementioned US CPI July data, we will get similar prints from Italy and Germany later today. US data will also include July’s monthly budget statement and weekly MBA mortgage applications. There will be more fed speakers today as Governor Bostic speaks for the second time this week and we will also hear from Governors Logan and George. The vast majority of earnings are currently behind us but there are some large cap names reporting today, including NIO, Prudential, EBAY, SMC Corp, Vestas, and Commonwealth Bank of Australia.
- S&P 500 futures down 0.1% to 4,424.25
- STOXX Europe 600 little changed at 472.73
- MXAP little changed at 200.78
- MXAPJ down 0.3% to 663.66
- Nikkei up 0.7% to 28,070.51
- Topix up 0.9% to 1,954.08
- Hang Seng Index up 0.2% to 26,660.16
- Shanghai Composite little changed at 3,532.62
- Sensex down 0.2% to 54,421.81
- Australia S&P/ASX 200 up 0.3% to 7,584.30
- Kospi down 0.7% to 3,220.62
- Brent Futures up 0.4% to $70.90/bbl
- Gold spot up 0.2% to $1,732.61
- U.S. Dollar Index little changed at 93.15
- German 10Y yield up 2.1 bps to -0.436%
- Euro little changed at $1.1714
- Brent Futures up 0.4% to $70.90/bbl
Top Overnight News from Bloomberg
- Senate Democrats took a major step toward the biggest expansion in decades of federal efforts to reduce poverty, care for the elderly and protect the environment, passing a $3.5 trillion budget framework that opens the way for President Joe Biden’s economic agenda
- New York Governor Andrew Cuomo’s resignation on Tuesday creates a power vacuum in the politics of a state he had dominated for a decade, adding new uncertainty for Democrats gearing up for crucial congressional and state elections next year
- Poland’s ruling coalition has crumbled, endangering the nationalists’ grip on power halfway through their second term
A more detailed look at global markets courtesy of Newsquawk
APAC stocks saw a mixed session following the similar handover from Wall Street, which saw the SPX and DJIA pushed to new records, whilst the NDX was pressured by higher sector-wide gains. The Nikkei 225 (+0.7%) took an early lead on the back of strength in its industrial and financial names, but later pulled back towards the 28k mark whilst Softbank shares remained weak following underwhelming earnings. The KOSPI (-0.7%) stayed subdued after North Korea warned of “massive security crises every minute”, as the US and South Korea gear up for the annual military drills. The Hang Seng (+0.2%) was choppy and fluctuated between gains and losses whilst the Shanghai Comp (+0.1%) was somewhat stable following the volatile price action earlier this week.
Top Asian News
- China Evergrande Soars After Confirming Talks to Sell Assets
- China’s Credit Expands at Slowest Pace Since February 2020
- JBS’s Salmon Deal at Risk as Billionaire Forrest Ups Stake
- China Vaccine Makers Fall After Global Sector Weakness
European equities (Eurostoxx 50 +0.2%) trade with marginal gains with the Stoxx 600 once again printing a fresh record high. Fresh macro developments for the region remain sparse with some of the discrepancies between individual indices dictated by earnings. The APAC lead was a relatively mixed one, whilst US futures currently trade with marginal losses after the SPX and DJIA rose to record highs during yesterday’s session. Developments stateside have seen the US Senate vote 50-49 to approve the USD 3.5trl Democratic Budget plan and thus pave the way for developing the budget bill and implementing priorities of the Biden administration. Elsewhere, the taper timeline debate remains at the forefront of market commentary with the latest Fed-speak from 2021 voter Evans suggesting that he would like to see a few more jobs reports before making a decision on tapering. Sectors trade predominantly firmer in Europe with minor outperformance in Media, Oil & Gas and Retail. To the downside, Travel & Leisure names lag as a by-product of Flutter Entertainment giving back some of yesterday’s earnings-inspired gains, whilst the rate-sensitive Tech sector is seen lower amid advances in global bond yields. Individual movers include ABN AMRO (+4.1%) at the top of the Stoxx 600 after reporting a firmer than expected recovery in net profit and announcing the resumption of dividend payments. Avast (+2.1%) sits at the top of the FTSE 100 after announcing that NortonLifeLock is to acquire the Co. in a USD 8.6bln deal. To the downside, ThyssenKrupp (-6.9%) sits at the foot of the Stoxx 600 after noting alongside earnings that contract structures at the Co. mean that there will be a delay in increased raw material and steel prices feeding through to revenues and earnings. Deliveroo (-4.4%) are also seen lower on the session post-encouraging earnings results with the Co. noting that it has not had any discussions with Delivery Hero since it invested and views it as just a financial investment.
Top European News
- Prudential 1H Adj Op. Profit From Cont Ops $1.57B vs $1.29B Y/Y
- Deliveroo Emerges From Lockdown With Sales Jump, Order Surge
- Wind Giant Vestas Plunges as Commodities Rally Bites
- European Gas Keeps Breaking Records on Tight Supply
In FX, the overriding theme is still Dollar outperformance, and with few exceptions to the rule as the DXY ventures further above 93.000 and nearer the final highs that stand in the way of the current 2021 pinnacle at 93.439 set right at the end of Q1. For the record, these stand at 93.194 from July 21 and 93.338 on April 1 vs 93.192 thus far in wake of last Friday’s strong US jobs data that has been widely recognised as constituting another step in the right direction for QE tapering by Fed officials including the ‘influencer’ and VC Clarida. However, the Euro is putting up a stern fight in defence of its y-t-d low and perhaps on the grounds that it resides in close proximity to a psychological level and Fib retracement just a few pips below 1.1700. Moreover, Eur/Usd may be deriving some traction indirectly via decent option expiry interest in the Eur/Gbp cross at the 0.8450 strike (1.1 bn) and the fact that this aligns with yesterday’s new 2021 base. Whatever the rationale, Eur/Usd is hovering within a 1.1726-06 range and Cable between 1.3844-07 parameters having retreated through technical support in the form of the 21 DMA (1.3830) and a Fib (1.3826 representing the 38.2% reversal 1.3982 to 1.3573) awaiting US CPI data, more Fed speak and the 2nd tranche of Quarterly Refunding.
- NZD/AUD/CAD - Cross-currents are also impacting trade down under as Aud/Nzd chops and changes from circa 1.0511 to 1.0471, and is probing the downside at present to the benefit of the Kiwi relative to the Aussie that is also contending with unfolding virus developments. On that very note, lockdown in Melbourne has been extended for another week to keep Aud/Usd depressed beneath 0.7350 along with consumer confidence, while Nzd/Usd continues to pivot 0.7000. Elsewhere, the Loonie continues to draw some comfort from comparative stability in WTI crude and is holding above 1.2550.
- CHF/JPY - The low yielders remain weak against the backdrop of more pronounced US Treasury bear-steepening, with the Franc now struggling to keep its head afloat of 0.9250 and the Yen trying to arrest a decline into 111.00 with little left in the way of support aside from mid/late June and early July troughs at 110.81 and 110.97.
In commodities, WTI and Brent are currently in proximity to the unchanged mark on the session, having given up the European morning’s initial modest gains, which took the benchmarks to highs of USD 68.78/bbl and USD 71.17/bbl respectively. Newsflow throughout the APAC session and this morning has been very minimal and not changed the dial for the complex at any point; for reference, the Private Inventories last night came in at a marginally smaller build than expected for the headline with the internals mixed and the report overlooked. Elsewhere, Iranian President Raisi has submitted his list of candidates for Parliamentary Cabinet positions which pertinently has Amir-Abdollahian as the Foreign Minister and Javad Oji as the Oil Minister. The foreign minister has historically been in charge of nuclear talks but Officials cited by the Times of Israel write that at this stage it is unclear if this will continue to be the case or if responsibility will transition to the National Security Council, for instance. Moving to metals, where it is once again a relatively uneventful session for spot gold and silver which haven’t been too afflicted by either the firmer USD or elevated yields thus far; currently, posting gains of 0.3% on the session. For the session ahead the US CPI print is the next point to watch for the metal and a preview of the release is available within the US Premarket Themes post. Elsewhere, copper prices are a touch softer in respite from the modest gains seen at this time yesterday as attention around the metal centres on negotiations around BHPs Escondida, Chile mine; which, thus far, have not resulted in a deal and as such government-mediated talks are ongoing. As a reminder, in the event a deal is not attained then the Union would be able to instigate strike action.
US Event Calendar
- 8:30am: July CPI MoM, est. 0.5%, prior 0.9%; YoY, est. 5.3%, prior 5.4%;
- 8:30am: July CPI Ex Food and Energy MoM, est. 0.4%, prior 0.9%; YoY, est. 4.3%, prior 4.5%
- 8:30am: July Real Avg Weekly Earnings YoY, prior -1.4%, revised -1.0%
- 2pm: July Monthly Budget Statement, est. -$300b, prior -$63b
DB's Jim Reid concludes the overnight wrap
Three days to go before my holidays. We are staying at home as quarantine rules (that have now been lifted) made us change our plans. Instead we are going to various theme parks in the south of England amongst other things. I can’t think of a worse way of relaxing and unwinding though, so expect me frazzled on my return. In preparation, today my wife is in training for the two weeks ahead and is taking the kids to “Diggerworld”. Their faces when I showed them a video of what goes on there last night suggests that watching today’s big US CPI print will be a far quieter affair.
So today should be a big day, however the evidence from recent big CPI prints is that the market doesn’t believe it’s sustainable so it might take a lot to shake things up today. For the record our US economists are expecting a +0.5% m/m increase in headline CPI and a tick down to 5.3% y/y, after last month came in at +0.9% m/m, which took the y/y reading to +5.4%. They expect a +0.4% m/m and +4.3% y/y core print after June was +0.9% m/m and +4.5% y/y. This follows three straight months of higher-than-expected headline price increases, +0.9% (+0.5% expected) in June, +0.6% (+0.5% expected) in May, and +0.8% (+0.2% expected) in April. The market saw Treasury yields move more than 5bps on the day of the last three CPI prints. US 10yr Treasury yields rose +5.2bps on last month’s release, and back in May, when the April data surprised to the upside for the first time, yields rose +7.0bps. On the other hand, yields fell -5.9bps the month in between when the data was more in-line with expectations. Yields have also fallen in the days following recent prints as markets haven’t been convinced. Let’s see if anything changes today. The breakdown will be very important so let’s see if more of the transitory inflation filters into non-covid related sectors.
As we approached the big day, equity markets were once again fairly steady yesterday, with the S&P 500 up +0.10% and the STOXX 600 rising +0.35% as cyclical stocks took the lead again. Energy stocks gained both in Europe (+0.44%) and the US (1.72%) as oil prices rebounded following their roughly 10% decline in the first handful of business days this month. Outside of energy, materials (+1.48%) and banks (+1.44%) were among the best performing industries in the S&P 500, while semiconductors (-1.36%), software (-0.76%) and tech hardware (-0.22%) were the largest laggards. In Europe, the reopening trade rebounded with travel & leisure (+1.99%) and basic resources (+1.43%) leading the overall index to a new record.
Ahead of today’s inflation data from the US, Fed Governor Mester yesterday addressed the new inflation targeting frameworks implemented by the Federal Reserve and European Central Bank. She said the new policy frameworks “were driven in part to just changes in inflation dynamics over the past two decades.” Looking forward, she noted that “understanding whether there is now a change in dynamics again in the aftermath of the pandemic is of vital interest” to central banks. Unlike Governor Bostic the day prior, she did not give any insight into tapering.
On the fiscal policy side, the US Senate passed their bipartisan infrastructure package that includes a $550 billion of new spending over the next eight years. The bill passed with a 69-30 vote margin in one of the more bipartisan bills passed in recent years, outside of the first two pandemic relief bills. The Senate will now recess as the House is set to take up the bill, though the lower chamber is on recess until September 20 currently. Senate Majority Leader Schumer quickly pivoted to the larger $3.5 trillion economic package that overhauls policies on healthcare, climate change, paid family leave, middle-class tax cuts, and higher education while increasing taxes on corporations and the wealthy to help pay for it. Schumer and Democratic leaders are expected to put that bill into a budget resolution framework that would only require 50 Senators and the Vice President’s tie-breaking vote to pass.
Whether it was the anticipation of another CPI upside surprise or in response to the infrastructure bill finally moving on, US 10yr Treasury yields rose +2.5bps to 1.349%. That was their 5th consecutive daily increase and leave rates just above of where they were the day after last month’s CPI release. The increase was driven by inflation expectations (+2.6bps) which rose to their highest levels of the month. In Europe sovereign bonds were largely unchanged with yields on 10yr German bunds (+0.3bps) and UK gilts (+0.5bps) slightly higher, while those on OATs (-0.1bps) and BTPs (-0.3bps) were the other side of unchanged.
Asian markets are mostly trading higher this morning outside of the Kospi (-0.56%) as South Korea reported a record number of daily coronavirus infections (more below). The Nikkei (+0.51%), Hang Seng (+0.21%), Shanghai Comp (+0.27%) and Asx (+0.42%) are all up. Futures on the S&P 500 are trading a touch weaker at -0.08% while yields on 10y USTs are a shade higher at 1.356%.
On the pandemic, the EU announced that it would not reinstate travel restrictions on non-essential travel from the US, which buoyed the airline industry as referenced above. However the Biden administration has kept its foreign travel restrictions largely in place, citing the high level of delta variant cases even as the US recorded over a 100k cases per day last week on average. Overnight, President Biden has urged Americans in states at risk of facing hurricanes to get vaccinated, saying the surging delta variant in those places would exacerbate any fallout from a severe storm. In terms of vaccinations, the UK has now inoculated 75% of adults with two doses. Lastly Asian economies are continuing to grapple with the increasing spread of the delta variant in the region. The outbreak in China is continuing to grow slowly, with another 111 cases reported yesterday. South Korea also reported a record 2,219 daily infections yesterday while Australia’s second largest city, Melbourne, has extended its lockdown by another week.
Back to data and in the US, the NFIB Small Business Optimism index was slightly lower than expected at 99.7 (102.0 expected) and down from last month’s 102.5 reading, with a record number of respondents saying they had trouble filling positions and planned to raise compensation in the next three months, tying into what we saw with the JOLTS data the day before. Preliminary Q2 Nonfarm productivity also missed to the downside, coming in at 2.3% (3.2% expected) after Q1 was revised down to 4.3% from 5.4%.
To the day ahead now, outside of the aforementioned US CPI July data, we will get similar prints from Italy and Germany later today. US data will also include July’s monthly budget statement and weekly MBA mortgage applications. There will be more fed speakers today as Governor Bostic speaks for the second time this week and we will also hear from Governors Logan and George. The vast majority of earnings are currently behind us but there are some large cap names reporting today, including NIO, Prudential, EBAY, SMC Corp, Vestas, and Commonwealth Bank of Australia.