So waking up now entails looking first at where the yuan is, followed by where the 10 yr US yield is at and then one can predict where the S&P futures are. Yes, the yuan is up and the 10 yr yield is unchanged after yesterday’s sharp reversal and the futures are rallying, along with overseas markets. At 9pm the yuan initially sold off after the fixing was above 7 for the first time since 2008 and the S&P futures followed lowered but both then quickly rallied as the fix wasn’t as weak as expected.
European bonds are selling off after US Treasury yields saw that sharp bounce yesterday. That in turn is helping European bank stocks to rally. Maybe yesterday’s lows in yields was a short term parabolic exhaustion. I emphasize ‘short term.’
China’s trade data for July was better than expected but I’m sure some was pulled forward before the trade meeting at the end of the month which was then followed by that 10% tariff tweet on $300b worth of stuff we all know about. Exports rose 3.3% y/o/y vs the estimate of down 1%. I’m sure August is going to have a surge in exports ahead of September 1st. Imports fell 5.6%, the 7th month in the past 8 down but that was better than the forecast of down 9%. The Shanghai comp was up almost 1% while the H share index was higher by .5%.
As expected the Philippines central bank mimicked Thailand, New Zealand and India with its rate cut today. they trimmed their overnight rate to 4.25% from 4.5%.
After the drop seen in Bulls yesterday in the II data, today’s AAII index of individual investor sentiment saw the Bulls drop sharply to 21.7, the lowest since mid December, from 38.4 last week. Bears spiked by 24.1 to 48.2, the highest since late December. From purely a contrarian standpoint, this is the perfect sentiment stance for a market rally, short term. I again emphasize, ‘short term.’
AAII BULLS
AAIIBEAR