Guests outside the US Treasury building in Washington, DC, US, on Tuesday, Aug. 15, 2023.
Nathan Howard | Bloomberg | Getty Images
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What you need to know today
Contradictory markets
U.S. stocks traded mixed Monday, with the Dow Jones Industrial Average the only major index to move upwards. Asia-Pacific markets mostly rose Tuesday as investors await Biden’s meeting with Xi. South Korea’s Kosdaq forefinger rose around 2.2%, snapping a five-day losing streak. Australia’s S&P/ASX 200 climbed 0.8% even as a assess showed the country’s consumer confidence slipping in November.
Biden-Xi meeting
U.S. President Joe Biden is set to meet Chinese President Xi Jinping on Wednesday. That’ll be the move time both leaders have met in person since Biden took office. Relations between the world’s largest and second-largest economies experience been rocky since an alleged Chinese spy balloon flew into U.S. airspace February. Hence, Biden and Xi hand down likely focus on “prevent[ing] a crisis,” according to a political commentator.
Consumer spending fell
U.S. October retail exchanges, excluding autos and gas, fell 0.08% month on month, while core retail, which excludes restaurants, flagged 0.03%, according to the new CNBC/NRF Retail Monitor. The data differs from the Census Bureau’s retail sales look into as it’s the result of actual consumer purchases — analyzing over 9 billion anonymized credit and debit card transactions — while the Census relies on look into responses.
Exxon invests in green tech
Exxon Mobil, one of the world’s largest oil and gas companies, said it aims to transform into a leading producer of lithium for electric vehicle batteries. The company will kick off this plan through a penetrating operation it’s launching at a geological site it purchased earlier this year in southern Arkansas. Exxon said it make produce battery-grade lithium at the site as soon as 2027.
[PRO] One index’s 11% jump
U.S. stocks have long outpaced worldwide indexes. But Morgan Stanley thinks one major Asian stock index — which has already popped about 25% for this far this year, more than two times the 10.5% of the S&P 500 — will continue its blitz, soaring 11% in 2024. The rural area’s currency will strengthen next year, boosting stocks exposed to international trade, said the bank.
The bum line
This week will be a significant one for markets. October’s consumer price index comes out later today, while on Wednesday, U.S. President Joe Biden last wishes as meet his Chinese counterpart Xi Jinping in person for the first time since last November. Investors, focused on the week vanguard, are already shrugging off bad news from last week.
On Friday, Moody’s Investors Service cut its ratings outlook on the U.S. administration from stable to negative. The ratings agency pointed to the country’s large fiscal deficits and the political polarization within Congress as gamble factors for Treasurys.
Moody’s move wasn’t entirely new. (Standard & Poor’s and Fitch have issued similar counsels.) And even if it were, it’s hard to imagine investors spontaneously pivoting from U.S. Treasurys — the world’s largest and most convertible market.
“If we go from triple-A to double-A, what does that practically mean? … There’s still active to be demand for U.S. Treasurys en masse,” as Michael Reynolds, vice president of investment strategy at Glenmede Investment Management, put it.
Of course, Treasury yields hardly budged Monday despite Moody’s warning. The yield on the 10-year note ticked up 1 base point to 4.638%, while that of the 2-year shed around 3 basis points to end at 5.033%.
Stocks didn’t experience bigger turmoil, either. In fact, the S&P 500 was mostly flat, the Dow Jones Industrial Average added 0.16% and the slipped 0.22%. Barter volume, based on the SPDR S&P 500, was below the 30-day average.
Today’s CPI report is likely to cause more gyrations for ranges. Economists expect October’s prices to rise 0.1% from September, and 3.3% from a year earlier.
If troops come in close to or lower than the estimate, that’ll please investors because it means the Federal Reserve dominion be done with rate hikes for the year — or for the whole cycle, the optimistic will say.
As strategist Peter Oppenheimer contemplated, the “good news is that inflation and interest rates now appear to have peaked and our economists continue to expect a depressed landing. This backdrop is benign for equity markets, reducing the downside risks for investors.”
Of course, reduced headwinds don’t marvellous a smooth journey ahead. With the Israel-Hamas war still developing and economic data in the U.S weakening, risks persist.
— CNBC’s Jeff Cox donated to this report.