The EUR is the strongest and the CAD is the weakest as the NA session begins.

The EUR is the strongest and the CAD is the weakest as the NA session begins.

US stocks are trading negative in premarket trading. Fitch said they may have to downgrade several banks, including the top tiered JPMorgan Chase, as reported by CNBC. If the industry is downgraded to A+, it would mean that top banks like JPMorgan and Bank of America would also be reduced from AA- to A+, as banks cannot have ratings higher than their operating environment. A downgrade for major banks like JPMorgan would prompt Fitch to reconsider ratings for all similar institutions, potentially moving some weaker banks closer to non-investment grade. Fitch had already lowered its view on the banking sector’s health in June, a move that went largely unnoticed. Another downgrade from AA- to A+ would compel Fitch to reassess ratings for over 70 U.S. banks. The KBE bank ETF is trading down -1.45%. Bank of America is trading down -1.05% and JPM Chase is trading down -1.20%. The KRE index of regional banks are trading. The KRE regional bank ETF is trading down -1.20%.

Overnight , China’s central bank lowered rates unexpectedly, aimed at aiding an economy still recovering from COVID impacts. The People’s Bank of China reduced its one-year medium-term lending facility rate from 2.65% to 2.50%, marking the second cut in three months. Recent data released today revealed a decline in China’s industrial output and retail sales for July, intensifying global growth worries and increasing demand for assets in the global reserve currency.

  • Industrial Production y/y

    • Actual: 3.7%
    • Forecast: 4.3%
    • Previous: 4.4%
  • Retail Sales y/y

    • Actual: 2.5%
    • Forecast: 4.2%
    • Previous: 3.1%
  • Unemployment Rate

    • Actual: 5.3%
    • Forecast: 5.2%
    • Previous: 5.2%

The offshore USDCNH rose to the highest level since November 2022 to 7.3207 .

The U.S. will release its July retail sales data at 8:30 AM. After a less-than-anticipated rise in June, a growth in demand is expected at the beginning of Q3. Analysts predict a 1.5% year-on-year increase and a 0.4% rise from the previous month for both the headline and the ex food and energy. Major retailers will be reporting earnings this week (Target and Walmart due to report later this week). HomeDepot kicked it off today with a beat. EPS came in at $4.64 vs $4.44 expected on revenues of $42.916B vs $42.21B estimate and announced a $15B buyback. Shares of HD are still trading down -0.41% in premarket trading.

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading down $0.80 or -1.00% at $81.69. The price is back below an old ceiling (that was broken last week) between $82.43 and $83.44. On the downside there is support at $79.
  • Spot gold is trading down $3.12 or -0.16% at $1904.03
  • Spot silver is trading down $0.15 or -0.69% at $22.44
  • Bitcoin is trading at $29,324. This time yesterday the price was trading at $29,390

In the US premarket for US stocks, major indices are moving lower:

  • Dow Industrial Average is trading down -273 points after closing up 26.23 points yesterday
  • S&P index is trading down -32 points after closing up 25.65 points yesterday
  • NASDAQ index is trading down 95 points after closing up 143.48 points yesterday

In the European equity markets, the major indices are trading mixed

  • German DAX, down -1.05%
  • France’s CAC, down -1.29%
  • UK’s FTSE 100, down -1.36%
  • Spain’s Ibex, down -1.14%
  • Italy’s FTSE MIB, up 0.57% (delayed)

In the Asian Pacific today, equity markets closed mixed.

  • Japan’s Nikkei 225, +0.56%
  • China’s Shanghai Composite, -0.07%
  • Hong Kong’s Hang Seng, -1.03%
  • Australia’s S&P/ASX 200, +0.3%

In the US debt market, yields are mixed. The shorter and today is higher while the longer and is modestly lower

  • 2-year yield, 4.975%, +1.1 basis points
  • 5-year yield, 4.393% +3.9 basis points
  • 10-year yield, 4.228%, +4.7 basis points
  • 30-year yield, 4.326%, +4.5 basis points

In the European debt market, benchmark 10-year yields are higher:

This article was written by Greg Michalowski at Source