Stocks plunged and Treasuries led a global bondrally due to an increase in safe haven demand after China struck back against the latest move by the US. China has asked state purchasers to suspend US agricultural imports as a countermeasure against President Trump’s announcement to impose additional 10% tariffs on Chinese imports effective September 1st. China, historically known to control its currency, allowed the yuan tumble to the weakest level in more than a decade which led President Trump to call it “currency manipulation”. He also indicated in his tweet that the Fed should act to counter China’s action. With trade war between the two countries intensifying, benchmark 10-yearTreasury yields dropped to their lowest level since 2016. In corporate news, trade bellwether, Caterpillar and Boeing led the slide in premarket. Elsewhere, WTI crude resumed its decline as fears compounded from a deepening trade war which might depress demand.
Market US Services PMI in July climbed to 53.00 from both prior and consensus readings of 52.20. The composite PMI also edged higher to 52.60 following 51.60 in prior month. Lastly, ISM Non-Manufacturing Index in July dropped to 53.70 from 55.10 prior vs. 55.50 consensus. Later today, the US Treasury is scheduled to auction off $39 billion of 3-month bills and $39 billion of 6-month bills at 8:30 AM (PT).
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Stocks plunged and Treasuries led a global bond rally due to an increase in safe haven demand after China struck back against the latest move by the US. China has asked state purchasers to suspend US agricultural imports as a countermeasure against President Trump’s announcement to impose additional 10% tariffs on Chinese imports effective September 1st. China, historically known to control its currency, allowed the yuan tumble to the weakest level in more than a decade which led President Trump to call it “currency manipulation”. He also indicated in his tweet that the Fed should act to counter China’s action. With trade war between the two countries intensifying, benchmark 10-year Treasury yields dropped to their lowest level since 2016. In corporate news, trade bellwether, Caterpillar and Boeing led the slide in premarket. Elsewhere, WTI crude resumed its decline as fears compounded from a deepening trade war which might depress demand.
Market US Services PMI in July climbed to 53.00 from both prior and consensus readings of 52.20. The composite PMI also edged higher to 52.60 following 51.60 in prior month. Lastly, ISM Non-Manufacturing Index in July dropped to 53.70 from 55.10 prior vs. 55.50 consensus. Later today, the US Treasury is scheduled to auction off $39 billion of 3-month bills and $39 billion of 6-month bills at 8:30 AM (PT).
The curve has bull-steepened with UST 10-Year yield down 8.53 bps.