Treasury Market Outlook: the markets remain uneasy
Treasury Market Outlook: the markets remain uneasy, as reflected in weaker equities, while bonds are mixed. The Hang Seng led global stocks lower with a 2.1% drop. European bourses are off about 0.4%, with U.S. futures down 0.15%. Longer dated bonds are modestly richer with the JGB closing 2 bps lower at -0.248%, while the Bund, Gilt, and Treasury 10-year notes are down slightly, but off lows. The investor worry list is growing with the September 1 deadline for more U.S. tariffs fast approaching, while the protests in Hong Kong add to the tensions on China. The crash in the Arg peso after the defeat of pro-business President Macri in presidential primaries has been added to the list, while Singapore made a substantial cut to growth 2019 forecasts, citing the Hong Kong situation, the U.S.-China and South Korea-Japan trade wars, and Brexit. A Reuters poll showed odds of a no-deal Brexit at 35%. A number of Asian central banks have turned more accommodative than expected. And the U.S. yield curve is at its flattest since the financial crisis and is fast nearing inversion. Meanwhile, though the yuan has stabilized after breaking the 7 barrier, the PBoC set the level at a new near 11-year low against the dollar at the day's midpoint fixing, at 7.0326, versus 7.0211 yesterday. The August German ZEW investor confidence index slumped to -44.1, though the U.S. NFIB small business optimism index inched up to 104.7 in July. The only other reports today are July CPI and weekly chain store sales. The earnings calendar has Advance Auto Parts, and JD.com.