German 10-year bonds fell nine basis points to a record low of 2.1 percent, while 30-year bonds also reached a record low, shedding 13 basis points to come in at 2.647 percent. Despite the declines, yield spreads with Greek bonds actually increased, with investors demanding a premium of 935 basis points. The 50 basis point increase is the first time since May that the spread has broken the 900 point plateau.
Source: Bloomberg
Orders for durable goods increased by just 0.3 percent in July providing further evidence that the pace of recovery in the US is slowing. Analysts had predicted an increase of 3 percent.
“This overall loss of momentum is noticeable, measurable and it’s cause for concern,” said Robert Dye, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, whose forecast was the lowest among those surveyed. “Manufacturing is still leading the recovery, but not nearly with as much vigor as earlier.”
Source: Bloomberg
An increase in the Ifo Business Climate Index which measures the confidence level of German businesses, caught market watchers by surprise, rising to 106.9, up from 106.2 in July. Most analysts predicted a decrease in the index.
The news of German confidence has strengthened the European currency. The euro is currently 0.2% higher against the dollar with one euro buying $1.26. It also rose slightly against the pound, to 82 pence, making the pound worth 1.2177 euros.
Source: BBC News
As expected, the Bank of Canada announced it was raising the benchmark lending rate by 25 basis points to 0.75 percent. This is the second increase in the past two months and comes as the Canadian economy continues to recover from last year’s recovery. Bank of Canada Governor Mark Carney gave little indication of future interest rate plans, but some analysts suggest there could be another 25 basis point increase in the near future to bring the lending rate to an even 1 percent.
Disappointing earnings from Goldman Sachs and IBM are expected to send North American stock markets into negative territory at this morning’s open. A weaker-than-expected housing starts report is also giving investors the jitters this morning.
Ahead of the opening bell, Dow Jones industrial average futures fell 84, or 0.8 percent, to 9,976. Standard & Poor’s 500 index futures dropped 10.10, or 1 percent, to 1,054, while Nasdaq 100 index futures fell 17, or 0.9 percent, to 1,789.
Source: Associated Press
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