- IMF cuts 2022 and 2023 global growth forecasts and says downside risks remain
- US July consumer confidence 95.7 vs 97.2 expected
- Richmond Fed manufacturing index for July 0 vs. -13 estimate
- US June new home sales 590K vs 660K expected
- Dallas Fed July services survey -10.9 vs -12.4 prior
- Philly Fed July non-manufacturing index +0.1 vs +4.6 prior
- May US CaseShiller 20-city house price index +20.5% vs +20.6% expected
- EU says gas savings deal would provide enough for an average winter
- German Green party has a re-think on nuclear energy after decades of attacking it
- Yellen will do her best at spinning the Q2 GDP report on Thursday
- ECB's De Cos: Risks to inflation remain on the upside and have intensified
- Shopify warns that ecommerce growth hasn't materialized post-pandemic, cuts 10% of staff
- Canada June prelim wholesale prices +0.5%
- US treasury auctions off $46 billion of 5 year notes at a high yield of 2.86%
Markets:
- Gold down $1 to $1717
- US 10-year yields down 1 bps to 2.80%
- S&P 500 down 1.2%, Nasdaq down 2%
- Bitcoin down 5.6%
- TTF gas up 20% to highest since March
- WTI crude oil down $1.83 to $94.87
- CHF leads, EUR lags
Corporate earnings and commentary set the tone for the day starting late yesterday when Wal-Mart slashed guidance. Some of the impact of that was blunted with the company saying it was discounting merchandise to move it, something that's deflationary and spurred hopes it would mean lower Fed rates.
The pain was compounded by Shopify laying off 10% of employees and saying that growth of ecommerce wasn't pulled ahead by covid like it anticipated.
Economic data was mostly ignored but there were some solid glimmers in the data as the Richmond, Philly and Dallas surveys showed some life. Consumer confidence dipped but was largely stable. The IMF growth downgrade was sobering and might have driven some of the selling.
Perhaps most-damaging was the further jump in European gas prices. That led to another slump in the euro and the EU voluntary deal on cutting demand didn't resonate. With TTF up 20%, the fears of a cold winter in Europe are turning into expectations and Goldman Sachs highlighted how there was no way out until 2025 when more LNG comes online.
The pound was strangely solid despite the European worries, with bids particularly strong into the fix. Flows might have been the culprit and that pair will be one to watch in the day ahead.
USD/CAD had fallen early but reversed on USD strength and oil weakness. US natural gas rose to nearly $10 again but gave back most of the gains to finish just above $9 as supply responds.
The bulk of the moves today may just have been about pre-Fed positioning and jitters. At the same time, some after hours decent numbers from GOOG and V have cooled some of the worries and that's given some life to USD/JPY.
