Financial Forecast - 9/6/2016

German factory orders rose by a smaller-than-expected 0.2% m/m in July after declining 0.3% in June. The U.K.'s BRC Retail Sales Monitor fell 0.9% y/y in August after increasing 1.1% in July. Retail sales in the euro-zone grew 1.1% m/m (2.9% y/y) in July, beating both expectations and June's 0.1% slide. The euro-zone's services PMI for August was revised down to 52.8 from the preliminary reading of 53.1. July's print was 52.9.

The ECB meeting is Thursday; WSJ reporting there is thoughts that the bank may be about to start buying stocks in Europe as the amount of available bonds won’t be enough to add stimulus. Central banks are the largest investors in bonds with years of trying to keep economies from falling off the cliff. Now stocks? Stock purchases don’t appear to be on the near-term agenda. But ECB officials haven’t ruled them out, and the idea could gain steam if they continue to undershoot their 2% inflation target. Where will it all end, buying stocks then buying commodities? Makes me wonder just how structurally damaged the global economies are. For all of the QEs and bond buying here and around the world, negative interest rates, still global economies can hardly sustain growth at 2.0%.

The DJIA opened +45, NASDAQ +6, S&P +3. 10 yr at 9:30 1.60% unchanged. FNMA 3.0 30 yr coupon +6 bps from Friday’s close and -5 bps from 9:30 Friday.

This week is thin on data, the key report this morning, the August ISM services sector index; last week the ISM manufacturing index went into contraction reported under 50 at 49.1 with new orders and employment also dropping under 50. Services account for about 65% of the economy making it a key for the Fed.

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