Morning Minutes

Weak China Trade Numbers Crush Commodities




Overnight, China reported disappointing export (-14.5% vs street -12.5%), and import (-12.4% vs street -5.0%), suggesting continued soft economic conditions and sending shockwaves through world markets.

With investors reassessing their outlook for resource demand, commodities are getting hammered this morning, particularly Copper down 2.5%, and WTI Crude Oil which is down 2.2%. The US Dollar is rallying today, gaining 0.5% against Gold and the Euro, 0.6% against the Pound, 0.9% against the Loonie and 1.1% against the Aussie.

Stock markets are also in retreat on this news. The Hang Seng dropped 1.8% overnight and in Europe, the Dax is down 1.4% while the FTSE is down 0.8%. US index futures are down 0.75%-0.95%.  

The US 10-year treasury note yield has stabilized near 4.00% this morning. Philadelphia Fed President Harker has suggested that the Fed may be close to done raising rates and that it could pause again soon, but also indicated that interest rates could remain near current levels for a while. Investors may be seeing this more as confirmation of current street thinking rather than anything new. Inflation and the outlook for interest rates looks like the dominant theme for this week’s economic data with the US and China set to report Consumer Price data on Thursday.

In earnings news, Eli Lilly ($2.11 vs street $1.98), UPS ($2.54 vs street $2.49) and Barrick Gold ($0.25 vs street $0.23) have all beaten expectations. After the close today, Sun Life and Great West Lifeco report results. US Banks may be active today as well after Moody’s cut their credit ratings on several regional banks today.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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