Risk assets look good as China slows

US equities are nearly flat on the day, a big improvement from the -30 point decline in premarket futures. This is another sign of buyer resilience.

It was not an easy day for the bulls as China was hit by a series of terrible economic data. This was accompanied by a 10 basis point rate cut and the market might see this as a sign of a safety net, but 10 basis points is not much to catch a real estate knife that falls.

After the Chinese data, the US numbers were just as bad. The Empire Fed has been one of the worst ever and a huge misfire on expectations as homebuilder sentiment continues to slide.

Despite all this, the mood is steadily improving.

Normally I would run with this kind of price action, but today is August 15th, right in the middle of summer vacation. I remember August 2018 and the markets were moving forward, happy to ignore all the mounting stress in the credit markets. It’s a time of year that lends itself to indulgence.

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