U.S. Indices closed in the red on Tuesday, as participants returned from the long Labour Day weekend, but were hit by the broader risk aversion amid numerous factors. In particular, but not limited to, the US appeals court ruling on Trump tariffs as illegal, geopolitical uncertainty, and the US Commerce Department revoking waivers for Intel/Samsung/SK Hynix/TSMC. Meanwhile, Treasuries saw broad-based selling alongside global fixed income as the US curve bear steepened on trade rulings, global fiscal/political woes, and supply. The Dollar saw strength amid the aforementioned risk-off, while the EUR, JPY, and GBP lagged. The latter was hit as focus resides on the UK’s fiscal outlook, which saw the UK 30-Year Yield hit a 27-year high, while the Japanese Yen was hit on yield differentials. Gold hit an all-time high. In the energy space, benchmarks were choppy but ultimately gained due to the wider geopolitical footing and the US imposing sanctions targeting Iranian oil, as opposed to the firmer Dollar and risk-off sentiment. There were no Fed speakers, while ISM Manufacturing largely supported the notion of rate cuts, but did little to move the dial amid the previously mentioned themes. Recapping the data, the headline and employment rose, but by less than expected, while prices paid unexpectedly declined. Construction spending declined 0.1%, as expected. ISM Manufacturing PMI for August rose to 48.7 from 48.0, but shy of the expected 49.0, and the same was seen with the Employment Index as it printed 43.8, against the expected 44.5 and prior 43.4. Prices paid fell to 63.7 from 64.8, and below the bottom end of the forecast range. New orders lifted back into expansionary territory at 51.4 from 47.1. Within the release, it notes that the past relationship between the Manufacturing PMI and the overall economy indicates that the August reading corresponds to a change of plus 1.8% in real GDP on an annualised basis. Within the survey respondents, one noted that “tariffs continue to wreak havoc on planning/scheduling activities, due to unexpected tariff announcements (such as 50% duties on imports from India), materials/supplies are now rising in price. Plans to bring production back into the US are impacted by higher material costs, making it more difficult to justify the return.” Oxford Economics write that tariffs are still putting upward pressure on input costs, and will likely intensify over the next couple of months. Therefore, OxEco say it won’t be surprising if the dip in prices paid is temporary, and it won’t have any bearing on whether or not the Fed opts to cut interest rates in September – that burden falls on the August employment and consumer price reports, Oxford adds. US Construction spending fell 0.1% as expected in July, modestly extending the 0.4% decline seen in June. The July reading brings the YTD value to 1.232 trillion, +2.2% Y/Y. Private construction spending fell 0.2%, private residential construction rose 0.1%, with the private non-residential component 0.5% lower M/M. Concerning public construction spending, that was 0.3% higher M/M, with educational construction and highway construction both down 0.1% M/M. The data has led Oxford Economics to revise its near-term forecast for business investment in structures lower. “Fiscal policy won’t provide meaningful relief to this GDP component until next year”. Elsewhere, Gold rose 1.66%, closing at a new-all-time high while Oil was firm, ending Tuesday’s session with a 2.5% gain.
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For anyone following my Platinum Service it made 127 points yesterday and is now down 83 points for September after ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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