By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Ailing long-dated sovereign bonds around the world caught a break yesterday on a mix of soft U.S. jobs signals, decent auction buying and ebbing oil prices. The bond bounce and Federal Reserve easing speculation added to Alphabet’s near 10% surge on its antitrust win to lift Wall Street stocks again on Wednesday, with index futures up again ahead of Thursday’s bell. The day ahead brings another stream of labor market updates ahead of Friday’s critical August payrolls report.
* Fed futures rallied to fully price a quarter point interest rate cut later this month after news of falling U.S. job openings added to a downbeat readout from the central bank’s ‘Beige Book’ on economic conditions and relatively dovish soundings from Fed officials. Two-year Treasury yields hit a four-month low. The U.S. Senate Banking Committee will hold a hearing on Thursday to consider President Donald Trump‘s nominee to the Fed board Stephen Miran while central bankers around the world fretted about potential threats to Fed independence.
* Long-dated government bond yields around the world pulled back from record or multi-year highs on Thursday in tandem with the 10 basis point slide in 30-year Treasuries from yesterday’s 5% peak, with Japan’s 30-year equivalent also getting a break after a bond sale there drew enough demand to calm the horses despite being the lowest bid-to-offer rate since June. UK 30-year gilts rallied too with a 20bp drop in yields from Wednesday’s highs. The dollar was firmer.
* Japan and the United States are in the final stages of talks to implement lower tariffs on Japanese automobile imports within 10-14 days after a U.S. presidential executive order. Japanese stocks rallied, but Chinese stocks sharply underperformed generally higher world stocks – falling the most in nearly five months after media reports of possible regulatory curbs on speculation.
Today’s column explores why the so-called ‘Fed put’ may not work for long-maturity bonds and why lower central bank rates could actually aggravate the problem.
Today’s Market Minute
* Donald Trump’s administration asked the U.S. Supreme Court on Wednesday to swiftly hear a bid to preserve his sweeping tariffs pursued under a 1977 law meant for emergencies after a lower court invalidated most of the levies that have been central to the Republican president’s economic and trade agenda.
* Alibaba (9988.HK) ByteDance and other Chinese tech firms remain keen on Nvidia‘s (NVDA.O) artificial intelligence chips despite regulators in Beijing strongly discouraging them from such purchases, four people with knowledge of procurement discussions said.
* North Korean leader Kim Jong Un said his country would “fully support” Russia’s army as a “fraternal duty”, and Russian President Vladimir Putin called the two countries’ ties “special”, state media KCNA reported on Thursday.
* A notable trend this year has been the often-counterintuitive market reactions to U.S. President Donald Trump’s efforts to upend many long-held economic norms. One of the biggest surprises, writes ROI markets columnist Jamie McGeever, has been the appreciation of China’s yuan.
* The high-stakes energy diplomacy in Beijing this week signals China’s willingness to defy U.S. President Donald Trump’s efforts to isolate Russia and assert U.S. energy dominance.Read the latest from ROI energy columnist Ron Bousso.
Chart of the day
U.S. job openings fell to a 10-month low in July and there were more unemployed people than positions available for the first time since the COVID-19 pandemic, data consistent with easing labor market conditions evident in that month’s broader employment report.
With reports on private sector payrolls and layoffs for August, along with weekly jobless claims numbers, due on Thursday, the signals for July will be held up to the light and Friday’s August employment report is then likely to be pivotal for Fed easing expectations.
Today’s events to watch
* U.S. August layoffs from Challenger (7:30 AM EDT) US August ADP private sector payrolls (8:15 AM EDT) weekly jobless claims (8:30 AM EDT), July goods trade balance (8:30 AM EDT) August service sector surveys from S&P Global (9:45 AM EDT) and ISM (10:00 AM EDT), Q2 labor costs and productivity (8:30 AM EDT); Canada July goods trade (8:30 AM EDT)
* Senate Banking Committee holds hearing on nomination of Stephen Miran to the Federal Reserve Board (9:00 AM EDT)
* New York Fed President John Williams and Chicago Fed President Austan Goolsbee both speak
* German Chancellor Friedrich Merz, UK Prime Minister Keir Starmer and NATO Secretary General Mark Rutte take part in talks with Ukraine’s President Volodymyr Zelenskiy in Paris
* U.S. corporate earnings: Broadcom, Copart, Lululemon
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(The opinions expressed here are those of the author, a columnist for Reuters)
(by Mike Dolan; editing by Philippa Fletcher)
