© © Reuters
By Geoffrey Smith
Investing.com – Joe Biden Selects Kamala Harris as his Runmate. Bond yields and the dollar rise ahead of the July consumer price inflation data release and a big 10-year note sale later. The UK saw the worst contraction of any G7 country in the second quarter, but the pound sterling is not impressed. And oil prices are rebounding on the back of a large number of inventory levels, with more of this coming from the upcoming EIA as well as OPEC's monthly report. Here's what you need to know in the financial markets on Wednesday August 12th.
$ 1, Treasury Yields Soar Ahead of Big 10 Year Note Sale (CPI)
The dollar hit its highest level in two weeks and over a month as gold stabilized after falling 5% on Tuesday.
The rise in 10-year yields was due to a large debt auction due at 1:00 p.m. CET (1700 GMT), a rigorous test of the market's ability to meet the credit requirements of a government facing deficit a has more than doubled the year before.
At 6:30 a.m. ET, the 10-year benchmark note returned 0.66%, just below its intraday high and 16 basis points above last week's lows.
The rise in bond yields was triggered by signs of higher-than-expected inflation at the factory gate in Tuesday's PPI release. This suggests that the market may be vulnerable to negative surprises from the July Consumer Price Index, which will be released at 8:30 a.m. ET. The 0.6% increase last month was the largest monthly increase in seven years. Analysts expect an increase of 0.3% this month.
2. Biden selects Kamala Harris
Democratic Party's presidential candidate Joe Biden selected California Senator Kamala Harris as his fellow campaigner to bolster support for women and ethnic minorities and to reassure centrist voters that the party's progressive wing will not have undue influence on education Politics if Biden is elected in November.
The election of Harris, a former attorney general, also arguably limits the vulnerability of Biden's campaign to claiming that it cannot defend law and order, a key campaign issue amid widespread violence in Portland and other cities this summer.
Harris has reportedly been a large recipient of donations from Silicon Valley in the past, which could spark speculation that a democratic government could avoid confrontation with giants like Facebook (NASDAQ :), Amazon (NASDAQ :), and Alphabet (NASDAQ 🙂 . on antitrust issues.
3. stocks will rebound; Tesla (NASDAQ 🙂 stock split, Tencent & # 39; s earnings in focus
US stock markets are expected to open higher after Tuesday's abrupt sell-off as the surge in bond yields reintroduced the almost forgotten notion of discount rates into stock valuations.
At 6:30 a.m. ET (1030 GMT), the contract rose 273 points, or 1.0%, while the S&P 500 futures contract rose 0.8% and the contract rose 1.0%.
Among the stocks likely to be in focus in early trading is Tesla, which rose 6% in after-hours trading after the company announced a five-for-one stock split. Such a step does not in itself have any impact on the market value of the company, but it does support it marginally by expanding its attractiveness for smaller investors.
Also in focus are Qualcomm (NASDAQ :), which won a major antitrust ruling on Tuesday, and Tencent, whose earnings slightly exceeded expectations for the quarter and allay fears of US sanctions against its WeChat messaging system.
4. The UK gets the biggest Covid-19 hit of all
The UK economy contracted more than 20% in the second quarter, making it the largest of all major industrialized economies. The decline was the result of a late and botched response to the first wave of coronavirus, and it also reflected the higher share of services in GDP compared to other economies.
Services were particularly hard hit by lockdown measures and also recovered more slowly.
However, monthly data for June showed that GDP, industrial production and construction output recovered faster than expected. This limited sterling losses against the euro and the dollar while the two major UK equity indices were mixed.
5. Oil jumps as support for inventory data; OPEC report eyeing
Crude oil prices rebounded from Tuesday lows, largely driven by the performance of other assets.
At 6:30 a.m., the futures rose 1.5% to $ 42.23 a barrel while the international marker rose 1.4% to $ 45.12 a barrel.
The market was propped up Tuesday by another relatively strong figure from the American Petroleum Institute, which indicated that US crude oil inventories were pulled more-than-expected by 4.4 million barrels over the past week, suggesting the US fuel demand recovery is still intact.
The government's data on weekly crude oil stocks is due at 10:30 am CET, while the Organization of Petroleum Exporting Countries will release its monthly global market report sometime earlier.