Market News

• August flash services PMI 48.4 vs 49.8 expected
• Prior 49.6
• August flash manufacturing PMI 51.5 vs 50.0 expected
• Prior 49.8
• August flash composite PMI 48.8 vs 49.5 expected
• Prior 49.4

The French private sector economy remains weak in August, with another contraction seen in overall business activity. This once again continues to reaffirm that the French economy remains on track for yet another subdued and mediocre quarterly showing as demand conditions remain soft.

The services sector was the main drag, offsetting the better showing in the manufacturing sector in August - which saw production rise for the first time since April. Of note, extreme heat was cited as a reason for lower activity levels. That sees demand conditions fall off further as…

Key takeaways for stock investors

• Sector rotation happens when investors move money from one part of the stock market to another.

• Recent signals suggest Consumer Staples may be entering early accumulation, while Utilities and Consumer Discretionary are cooling off.

• Price alone is not enough. Investors should also examine fund flows, professional positioning, relative performance and the reason behind the move.

• A defensive sector can still fall, while a popular investment story can become a poor entry if too many investors already own it.

• Sector rotation cannot predict the future, but it can show how expectations are changing beneath the headline index.

The stock market is not one single trade.

The S&P 500 might finish a day nearly unchanged, but…

• July retail sales -0.5% vs -0.5% m/m expected
• Prior +1.0%; revised to +0.7%
• July retail sales +1.6% vs +2.2% y/y expected
• Prir +4.2%; revised to +3.8%
• July retail sales (ex autos, fuel) -0.9% vs -0.5% m/m expected
• Prior +1.1%; revised to +0.9%
• July retail sales (ex autos, fuel) +2.3% vs +3.3% y/y expected
• Prior +5.4%; revised to +5.0%

The drop in July comes mostly from non-food store sales as well as non-store retailing, with ONS noting that the lower activity in July can be attributed to "demand being brought forward to June because of earlier than usual promotional activity".

Of note, department store sales fell by 1.4% on the month while textile, clothing, and footwear store sales fell by 2.7% on the month. Meanwhile, non-store retailing fell…

I think everyone has talked enough about the US Treasury move to double long-term debt buybacks this week, and its impact on broader markets. Bessent was even bold enough to suggest that they might do more and take further action if needed, considering that "yields do not reflect underlying fundamentals".

While the action by the US Treasury seems straightforward enough, there are potential risks associated to it. Thus, making it not so much a move that goes unpunished if they were to keep jerking markets around in this manner.

I mentioned yesterday already here how it can create a moral hazard of sorts and also how it could impact funding markets. So, let's continue to build on that just so we can be aware of what unintended consequences…

US long-term yields have bounced back in the second half of the week in erasing much of the drop from the US Treasury announcement. 10-year yields have more or less recovered fully to be back up to 4.704% now while 30-year yields are nudging back up to 5.251% on the day.

However, whether or not yields will look to break higher will depend on the conviction of the bond vigilantes - whom might be still cautious in wanting to challenge the "Bessent put" so quickly.

After the Wednesday announcement to double long-term debt buybacks, Bessent stepped in with some verbal intervention of his own yesterday. In case you missed it: US Treasury Secretary Bessent says the long-dated bond buyback could be more than $4 billion

This all sounds rather…

Gold has been a hot topic this week again, owing much thanks to the US Treasury move on Wednesday. Bessent & co. called to double buybacks at the long-end of the curve and that led to a return of two key tailwinds for gold. That being a fall in the dollar and Treasury yields falling/being suppressed. The latter in particular is quite significant, with Bessent even doubling down on the narrative here.

In essence, it's a signal that there is a clear "Bessent put" in the market right now.

Even though Treasury yields have bounced back up in the past few sessions, we're still seeing gold stay poised as we look to the final stretch this week. The precious metal is up 0.6% to $4,544 as it looks to keep a firm break above the $4,500 level ahead of…

The move signals Korea's intent to convert a cyclical windfall from the global chip upswing into a durable, long term investment vehicle rather than one off spending, which could support sustained capital deployment into strategic technology sectors regardless of near term swings in chip demand. For Korea's semiconductor heavy economy, formalising a channel to reinvest AI driven tax gains back into growth initiatives may reinforce the country's positioning in the broader AI and chip supply chain race, a theme markets have rewarded through 2026. The scale and structure of the fund remain unclear at this stage, so the near term market impact is likely to be limited to sentiment around Korea's long term tech competitiveness rather than an…

The divergence between Japan and Korea on Friday captures how differently regional markets are digesting the same set of global pressures. Japan's slide reflects a fairly direct read-through from rising oil prices and bond yields into inflation and rate expectations, a sensitivity that has been building through the week as Middle East tensions escalate. Korea's reversal, by contrast, shows chip sector strength from overnight US peers outweighing the same macro headwinds that hit Japan, at least for one session, though the index remains on track for a weekly loss overall. With Bessent's sanctions threat adding a fresh layer of uncertainty into an already tense standoff, oil price volatility looks set to remain the dominant swing factor for…

• Asia shares mixed as Nikkei heads for worst week in a month on oil fears
• China vice finance minister signals more fiscal support as economy slows
• USD slammed in Asia Friday: Bitcoin, gold, FX surge as investors hedge against US fiscal credibility concerns
• Goldman veteran Currie ties gold rally to debasement as commodities capture scarcity premium
• PBOC sets USD/ CNY reference rate for today at 6.7817 (vs. estimate at 6.7262)
• Bitcoin price forecasts for year 2027
• Flash PMI shows Japan factories leading strongest growth since February
• Once the world's top gold buyer, Russia's central bank now a steady seller
• BOJ seen hiking to 1.25% in September as Japan inflation pressures broaden
• Iran plans oil strikes to hurt Trump before midterms, official says
• <a href="https://investinglive.com/news/japan-july-headline-cpi-1-8-y-y-expected-1-8"…

The intervention fits a well established pattern for the RBI through 2026, stepping in periodically to smooth volatility rather than defend a specific level, typically when USD/INR approaches its record highs. That USD/INR is little changed despite the reported dollar sales suggests the central bank is currently offsetting fresh depreciation pressure rather than driving an outright reversal, consistent with analyst characterisations of the RBI's approach as containing losses rather than reclaiming lost ground. The rupee has lagged the broader Asian currency complex this year, weighed down by elevated oil prices given India's heavy import dependence, persistent foreign portfolio outflows from Indian equities, and periodic friction over US…

Liao Min's comments arrive against a backdrop of a broadening Chinese slowdown, with industrial output and retail sales both missing forecasts in July and officials already weighing fresh stimulus after growth abruptly weakened. The emphasis on timely, incremental measures rather than a large one-off package fits the pattern policymakers have followed through 2026, favouring calibrated support over aggressive stimulus even as deflationary pressure and soft domestic demand persist. Markets sensitive to Chinese demand, including industrial commodities and regional currencies, are likely to parse the comments for confirmation that Beijing is prepared to act rather than simply monitor, though the lack of specific figures or a timeline leaves…

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate. More here on this.

• PBoC injects 95bn yuan through 7 day reverse repos at 1.4%
• over the week the net draw has been 272 bn yuan