Lack of catalysts into weekend trade
Nikkei 0.51% Dax -0.29%
UST 10Y 0.668
Asia and the EU
EUR Consumer Confidence 103.4 vs. 100.8
North America Open
USD Durable Good 8:30
Its been a very quiet rangebound night of trade with a slight risk-off tone in equities while currencies remained moribund as well with most market participants in wait and see mode as fresh catalysts were absent.
With no significant economic or political data on the docket today there is little to move the markets as equities continue to essentially consolidate. The V-shaped recovery theme is quickly losing its power as the latest economic data suggests that the greatest benefits of the rebound are behind us. While demand continues to pick up the marginal rate of change has slowed markedly as evidenced by the latest US retail sales figures while labor demand is actually reversing.
Although Speaker Pelosi has signaled that the House will put forth a new version of a stimulus bill the prospects for swift passage ahead of the election appear slim and without additional spending from the government the rebound trade is clearly running out of gas. Little wonder then that equities are doing a slow bleed as all the indices are down on the week.
The bulls may take solace from the fact that both S&P and Nasdaq held at their support this week, but it may be a Pyrrhic victory at best as the probe of the downside will likely continue if traders become convinced that the COVID recovery is starting to stall.
On the docket today the market only sees Durable Goods which are expected to come in considerably weaker than the prior month’s reading at 1.5% versus 11.5% and would only reinforce the notion that the rebound is done for now which in turn could push equities lower as the day proceeds.