It’s far less rosy around the world for a start – even if that gap in performance is starting to see the dollar re-assert itself on the foreign exchanges.
China’s spluttering economy threw up another miss on Monday as official business surveys showed manufacturing contracting for a fourth straight month in July while services and construction are stalling.
While that has spurred hopes of government stimulus to support an ailing property sector and head off deepening deflation worries, there has still been little more than piecemeal measures and warm words from Beijing so far.
Partly dragged down by the stalling Chinese industrial sector and also luxury goods demand, the euro zone’s second-quarter economic rebound showed half the growth registered in the United States and inflation remains more than two percentage points higher – with core inflation topping forecasts for July.
The Bank of England, meantime, is set to hike interest rates again this week – with money markets putting 66% chance of another quarter-point rise to 5.25%.
The Bank of Japan’s monetary policy tweak on Friday did little to change the bigger picture there, even though the central bank warned about rising prices and wages on Monday. While 10-year Japanese bond yields have climbed about 15 basis points from just before the shift, the yen has resumed weakening – helping buoy Tokyo stocks.
Back on Wall Street, another heavy earnings week beckons and the July U.S. employment report on Friday looms large.
Stock futures are marginally positive ahead of Monday’s open, Asia bourses mostly just caught up with Friday’s U.S. gains and European indexes were little changed.
U.S. Treasury yields were steady, with the dollar firmer – due mainly to dollar/yen’s jump to three-week highs.
Euro zone banks were higher, brushing off Friday’s stress tests from the European Banking Authority that showed three out of some 70 European Union banks failed to meet binding capital requirements under extreme macroeconomic scenarios.
