Riskier assets and gold ended last week with huge gains due to the weak US dollar’s performance. Let’s discuss what will drive the markets today.
American consumer spending rallies
In August, American consumer spending surged steadily, backing hopes for firm economic rally in the third quarter. Moreover, a measure of underlying inflation was still at the US key bank’s 2% objective for a fourth straight month.
On Friday, the Commerce Department disclosed that consumer spending, accounting for more than two-thirds of American economic activity, tacked on by 0.3% in August after July’s unrevised 0.4% leap. The previous month spending was powered by outlays on healthcare that compensated a sag in car sales.
August's rally in consumer spending appeared to be in line with experts’ estimates.
When updated for inflation, in August consumer spending added 0.2% having soared by 0.3% in July.
The report showed up on the heels of data on Thursday disclosing a dive in orders for primary capital products in August as well as a further extension of the products trade deficit that helped market experts to had their GDP estimates downgraded for the third quarter to a 2.8% annualized rate.
As a matter of fact, in the second quarter the American economy rallied at a 4.2% tempo, driven by firm consumer spending along with farmers front-loading soybean exports to China before this country’s retaliatory levies came into effect in July.
China and America are embroiled in a worsening trade conflict. Market experts have already warned that the increasingly bitter trade feud could impact consumer and business spending.
American Treasury yields kept to session minimums after the data. American stock index futures headed south, while the USD index surged versus a pack of key currencies.
Spending on goods surged by 0.3% in August, probably backed by higher gasoline prices. In July, spending on products ascended by 0.5%. As for outlays on services, they managed to rally by 0.4%.
Personal income added 0.3% in August.
The US president is back to White House after three days spent in the hospital. Riskier assets rose, while safe havens dipped.
The market sentiment has switched to risk-on, driving upwards stocks and riskier currencies and weighing on the US dollar.
The market is resilient ahead of the speeches of Fed’s Powell and ECB President Lagarde, but there are still interesting movements.
The uncertainty over US fiscal stimulus and Brexit, and also rising new virus cases deteriorated the market mood. That’s why we can expect the further rally of the US dollar and the fall of riskier assets today.
The market sentiment is mixed, but there are still interesting movements on the market.