Cold Shower by the United States on the financial markets caught out by the data, below expectations, the services PMI. The index fell to 51.4 in August, the lowest level in six years, against expectations at an altitude of 55 and compared with 55.5 in July. This is a sharp reversal for a crucial sector of the US economy, the services sector, which generates about 70% of gross domestic product.
The European stock markets reversed course in the afternoon after the publication of the index that sparked immediate reactions also in the market for the US government bonds. The yield – which moves in the opposite direction to prices and therefore tends to fall when a stock is bought – the tenth anniversary fell all’1,541% dall’1,597% last Friday, the last session before a long weekend on Monday had kept closed US markets. The title of the three-month rate fell to 0.322%. The fall in yields reflects investor sentiment that at this point, and even more after the given macro yesterday, do not believe that the Federal Reserve may raise interest rates in the next meeting of 20 and 21 September. The majority of investors (but we are at 53%, so it is a head to head) believes that even in December the Fed will return the appointment with monetary tightening. If this were 2016 would close without maneuvering on rates, well below the expectations of the beginning of the year when the Fed minutes are hypothesized four mini hikes.
The news has also impacted on the currency market with the dollar it weakened. The euro strengthened back above 1.12 share against the greenback. Also rising markedly the pound (from 1.32 to 1.34) in the wake of the new macro data that seem to Send out the specter of a recession in the UK and dispel the forecasts of many economists by Cassandre after Brexit. The Markit services index, the dominant sector of the economy across the Channel, after the collapse of July has in fact staged a strong recovery, with the largest monthly increase in its 20-year history. Improved record that is in addition to encouraging economic statistics in recent days in the manufacturing and construction sectors, as well as on consumer confidence.
In this framework, the European bourses yesterday took a day of reflection. The Eurostoxx 50 index closed with a decline of 0.24%. black mesh on the Milan Stock where the Ftse Mib index ended trade with a drop of 0.8% penalized by bank and energy stocks. The oil stocks have suffered from the weakness of oil on which they are taken to profit taking after recent gains. Brent crude fell 1.6% to $ 46.8 per barrel, the quality Texan WTI traded in New York at $ 44.3 (-1.8%). A snap the previous increases had been the announcement, during the G20 in China, of a possible cooperation between Saudi Arabia, the world’s largest producer and OPEC, and Russia, the main exporter who does not adhere to the cartel. The possibility of a concerted maneuver could then reappear on the table for the next summit, to be held on the sidelines of an international forum on energy to be held from September 26 in Algeria. To date the United exporters have simply decided to freeze the levels of supply to those of last January, however, quite high based on historical precedents. The move failed to raise the prices, which, however, have stabilized in the vicinity of 45-50 dollars after steep declines in the previous two years, and last February (when the price has slipped below the threshold of $ 30 per barrel).
Meanwhile, a growing expectation on the decisions that the ECB will communicate tomorrow at 14.30. Enhance the current expansion program (quantitative easing) which has exceeded 1,000 billion euro? “The ECB will extend the Qe of six to nine months’, states Robert Greil, chief strategist of the private bank Merck Finck, according to which a new rate cut on overnight deposits, already at -0.40%,” it is unlikely ” . Marco Valli, Chief Economist for the Eurozone UniCredit Research, the ECB will have to choose between “an immediate announcement or postpone everything in December,” although, he adds, the latter is the most likely. There are some who went so far as to speculate that Draghi no longer gives any deadline to Qe, saying only that the program will continue until inflation will not be returned on a path consistent with the target.
. @ Vitolops
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