Need To Know News

Gross also essentially said federal regulators will delay the bailout until after the election, if possible.

The energy complex finished higher across the board with Crude up 0.8% to 115.47, Unleaded gaining 1.6% to 291, Heating Oil rising 1.4% to 316.65 and Natural Gas adding 1.3% to 8.082.

Crude rallied for much of the afternoon to reverse its morning losses. Today was the last day of trading for the September contract, and traders may have been unwinding their month-long shorts or rolling over their positions into the October contract. October Crude closed at 115.59.

Natural Gas also rallied in the afternoon, breaking through resistance at the $8 level. Tomorrow resistance will be at the 9-day moving average of 8.171 with support at $8.

Heating Oil continued to be supported by the 200-day moving average (306.10). For the second straight day, the 320 level served as resistance.

The August Philly Fed Index is expected to improve to -12.6 following a -16.3 reading in July and a -17.1 reading in June. The July New Orders Index improved slightly to -12.1, the July Shipments Index fell to -8, the July Employee’s Index fell to -7.3 and the July Prices Paid Index surged to 75.6 from 69.3 in June.

Despite the considerable improvement from its record low in April at -24.9, the Philly Fed Index continues to underperform the other major manufacturing surveys. Elevated prices will continue to complicate the performance of manufacturers in the region going forward.

The Empire State Index improved to 2.8 in August from -4.9 in July; however prices remained elevated as New York manufactures noted higher resource and employee benefit costs. The Philly Fed Index has underperformed the Empire State Index almost every month for the past 2 years.

BoA: up 1%

Wells Fargo: up 1.5%

WaMu: down 7%

European equity indices rebounded from yesterday’s extensive sell-off thanks to a recovery in the mining sector and better-than-expected earnings from HP. The DJ Euro-Stoxx gained 0.5% to 3,295, the FTSE 100 gained 1% to 5,371 and the DAX Index grew 0.6% to 6,317.

European bonds reversed their earlier course and were well bid after the German Economy Ministry said the growth outlook in Germany has “darkened.” The uncertainty plaguing the European economies were also well reflected in the BOE August policy minutes which revealed a three-way-split between policy makers. Bonds were also supported by Eurozone Construction output data, which fell at 2.4% annualized rate in June. The 10yr Gilt gained 0.25%, pushing its yield down 3bps to 4.553%; and the 10yr Bund was up 0.33%, lower its yield 4bps to 4.303%.

EUR/USD and Cable were each generally range-bound in the European session, while EUR/GBP broke out a narrow range to peak out at 0.79355 before slipping into the red after the European close.

The finance ministers of the G-7 today issued the following statement:

“G-7 Finance Ministers welcome the international mediation efforts to end the hostilities and to bring about a political solution to the conflict in Georgia. The loss of life, humanitarian suffering and wider destruction over recent days is considerable, and we welcome commitments to assist with the urgent humanitarian needs.

“We, the G-7, stand ready to support Georgia in order to promote the continued health of the Georgian economy, maintain confidence in Georgia’s financial system and support economic reconstruction.

“In this regard we welcome the commitment by Georgia and the International Monetary Fund to work together to reinforce the soundness of Georgia’s economic reform program. We also call on the Georgian authorities, other countries, the World Bank, European Bank for Reconstruction and Development, Asian Development Bank, European Investment Bank, and European Commission to promptly identify and support reconstruction needs and the restoration of services that will build a base for future economic growth.

“Georgia has solid economic fundamentals as a result of economic reforms and sound policies, and we are committed to helping Georgia continue on this path.”

The EIA also said oil demand won’t decline as much in H2 as in H1. Non-OECD nations will see strong growth in demand.

The July US Leading Economic Index(LEI) is expected to fall 0.2% following a 0.1% decrease in June and a 0.2% decrease in May. The July LEI was down 2.1% year-over-year and was down 1.7% on a 6month annualized basis. The June Coincident Index was up 0.1% in June following a 0.1% decrease in May and the June Lagging Index was down 0.3% in June following a 0.2% drop in May.

Positive contributions to the July LEI include:

• Improvement in the 10yr Treasury relative to Fed funds. The 10yr yield fell to 4.095 early in July before improving to 4.33% later in the month.
• Improved UofM Confidence data. The UofM Confidence survey bounced off an all time low in June, and though still generally negative will help boost July LEI.

Negative contributions to the July LEI include:

• Declines in equity markets. The S&P cash index was dropped nearly 5% in July.
• Higher initial jobless claims. Initial jobless claims grew to 449k during the last week of July from 348k during the first week of the month.
• Fewer building permits. July building permits fell to 937k from an upwardly revised 1.138mln in June.

Other Index components expected to have limited impact on July LEI include:

• ISM supplier deliveries which were unchanged at 55.1 in July
• Roughly unchanged factory workweek
• Nearly unchanged Consumer Goods Orders
• Nearly unchanged M2 money supply
• Slight improvement in real non-durable consumer goods orders