Markets are hesitant to head in either direction ahead of the U.S. retail sales report.
Two hours before the opening bell, S&P 500 futures are down 2.00 points to 1,114.50 and the 10 year Treasury note is +0-07 at 99-05 yielding 2.723%. The November delivery FNCL 4.0 is +0-04 at 102-12.
Gains yesterday helped to push equities in all three major indexes above their 200-day moving averages. Interest rates rallied too though, with the 10 year note bouncing aggressively at long term support (2.85%).
Key Events Today:
8:30 ― Retail Sales, the key economic index this week, is expected to increase 0.3% in August. The anticipated rise, which follows a 0.4% gain in July and a 0.3% decline in June, is due to broad-based spending, as indicated by the +0.4% prediction for sales excluding autos. Also, consumer confidence increased in August.
“The GAFO (general merchandise, apparel and accessories, furniture and other sales) sales category is the main driver behind the projected August gains,” said forecasters at IHS Global Insight. “In addition, sales at gasoline stations will be pushed up by higher seasonally-adjusted gasoline prices.”
Economists at Deutsche Bank point out that the household savings rate is currently at 5.9%, up from 0.8% in mid-2005, indicating consumers have some ability to consume.
10:00 ― Business Inventories are expected to advance 0.6% in July following climbs of 0.3% and 0.2% in June and May. The consecutive advances could mean businesses are building inventories in anticipation of demand. Economists at Nomura say their prediction for a 0.5% increase is based on the already-reported 1% gain in manufacturing inventories.
ISSUANCE
* FHLB announces global offering
* 11:30 Treasury auctions 4-week bills
* JBIC, benchmark 5-year [guidance ms+27 area]; BAML/JPM/Nomura
* Manulife Financial, benchmark 2-part 5s/10s; Citi/MS
* RBS, benchmark 5-year [guidance T+255(+/-5bps)]; RBS
* Blackstone Group, $400m 10.5-year; BAML/JPM/MS
* Woolworths Ltd, benchmark 2-part 5s/10s [guidance T+125(5s);+145(10s)];BAML/Citi/JPM
* CBA, potential benchmark deal; JPM
* Santander Chile, benchmark 5-year; Santander/DB/JPM; Expected later this week
* Korea Finance Corp, benchmark 5 or 5.5-year likely; Barc/BNPP/Citi/CS/KDB