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Sep 1, 2016

Bloomberg Markets - September 1, 2016: Five Things You Need to Know to Start Your Day

Bloomberg Markets
Lorcan Roche Kelly


U.K. manufacturing PMI surprised the market this morning when it came in at 53.3 for August, against expectations of 49 and a five-point increase from July's 48.3 reading. The pound surged as much as 1 percent following the data release. In the euro-area, manufacturing PMI fell to a three-month low of 51.7, driven by a slowdown in order growth. There was good news from China's official factory gauge overnight as it unexpectedly rose to the highest level in almost two years. Markit manufacturing PMI data for the U.S. is due later this morning.

Oil under $45

A barrel of West Texas Intermediate for October delivery was trading at $44.57 at 5:55 a.m. ET, with the commodity dropping more than 6.4 percent this week. Russia's Energy Ministry said it sees no need for talks on capping production with oil prices around $50 in a statement ahead of OPEC talks in Algiers later this month. Saudi Arabia, the world's biggest oil exporter, will not boost output capacity and flood the market ahead of that meeting, the kingdom’s Energy Minister Khalid Al-Falih said.

More rate rises

Former bond-king Bill Gross has called for two Fed rate hikes by as early as March next year, twice the pace markets currently expect. The billionaire money manager said in a client note yesterday that negative yields are turning assets into a liability and stifling the financial system. Currently, the probability of a rate hike in September is 36 percent, according to the futures market, with the chances of a second hike not getting above 50 percent in the forecast horizon until the end of 2017. That all might change tomorrow, though, depending on what payrolls data show.

Markets rise

After a disappointing end to August, equity markets are starting September on a more positive note. Overnight, the MSCI Asia Pacific Index was little changed at 138.05, while Japan's Topix index rose 0.6 percent. In Europe, the Stoxx 600 Index was 0.7 percent higher at 6:11 a.m. ET, a gain led by banks, and enough to erase the index's post-Brexit vote losses. S&P 500 futures were up 0.1 percent.

Coming up...

While markets are waiting for the daddy of econ data tomorrow, there is plenty due this morning to whet the appetite. At 8:30 a.m. ET we get the latest weekly jobless claims, with expectations for a slight rise to 265,000 from last week's 261,000. At 9:45 a.m. Markit release manufacturing PMI data for the U.S., with ISM manufacturing due at 10 a.m. Also today, domestic vehicle sales data is due, with expectations for total sales to drop to 17.2 million from July's 17.77 million.

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