HIGHLIGHTS
US equities dropped slightly after the AI-related news. All eyes were on Nvidia earnings, and it dropped 6% afterward. Although the earnings beat expectations, the sales forecast and production snags failed to impress the market.
Soft Landing: Key economic data support the scenario of a soft landing. Inflation continues to cool down, with the core personal consumption expenditures price index reported within expectation. Consumer spending increased and Q2 GDP was revised up. Markets are now pricing 100bps cuts by year-end.
China: The People’s Bank of China bought USD14 billion of debt to boost the local bond markets. Given the low spending numbers, disappointing earnings, lack of demand and weakness in the property sector, China is considering a refinancing plan for homeowners, affecting USD5.4 trillion in mortgages.
Germany: The major equity index in Germany hit an all-time high this week, mainly driven by the decline in consumer prices and optimism of more rate cuts. However, there are headwinds from the slow recovery in the eurozone and China.
MARKETS
17,713.62 | -0.92% | |
S&P 500 | 5,648.40 | +0.24% |
Dow | 41,563.08 | +0.94% |
10-Year | 3.91% | +11bps |
Brent | 77.04 | -1.53% |
DXY | 101.73 | +1.04% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: Mega tech firms are increasing their capital spending as their managements emphasized their commitment at the latest earnings calls. There are signs that they are turning AI investments into revenue growth. We expect the monetization trend to continue improving in the coming year.
Standard Chartered: Although there was a rebound in global equities, it has discounted many positives. We believe the volatility will stay high in the coming months.
Fixed Income
Standard Chartered: We believe the bond yields have peaked because of the decline in inflation and a weaker growth outlook. Any jump towards 4% would be seen as an opportunity to add bond exposure and lengthen the duration of bond portfolios.
Morgan Stanley: Treasury rate was down due to the good news on inflation and the Fed speech in Jackson Hole. Yield differentials with Japanese government bonds and German bunds are normalizing. The US dollar has begun to weaken as the excess US rate carry is arriving at the average levels.
Economy
Barclays: The decline in tax revenues in China indicated the drop in profit margins and weakness in the job market. Meanwhile, the increasing non-tax revenues raised concerns about the deteriorating business environment.
UBS: Investors are shifting their focus from inflation to the labor market. The nonfarm payrolls report could be important, while even stronger labor data is unlikely to take September cut off the table. In contrast, weaker labor data could increase the likelihood of a 50bps cut.
KNOWLEDGE TRANSFER
GLP-1
Here's all you need to know about the Game-Changing Obesity Drugs.
DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
Comments