President Trump set to end stimulus talks

President Trump set to end stimulus talks 150 150 Realm

US stocks closed sharply lower following a sell-off in the final hour after having spent much of the day’s session in positive territory. U.S. President Donald Trump’s tweet that he would end negotiations on a new fiscal stimulus package sent shivers and triggered the sell-off. Trump said he has instructed his administration’s negotiators to stop stimulus discussions with Democrats until after the Nov.3 presidential election. This came shortly after Fed Chair Jerome Powell had called for more stimulus because the economic recovery “has a long way to go.”

 

Global Macro

  • The number of job openings in the US fell by 204,000 from a month earlier to 6.493 million in August of 2020, below market expectations of 6.685 million and pre-pandemic level of 7 million. The number of job openings edged down for private (-242,000) and was little changed for government. By industry, declines were seen in construction ( 68,000), and information (-25,000). The number of job openings decreased in the Midwest region. Meantime, the number of hires were little changed at 5.9 million, while total separations including quits, layoffs and discharges, and other separations dropped by 394,000 to 4.6 million.
  • The trade gap in the US widened to USD 67.1 billion in August of 2020 from a downwardly revised USD 63.4 billion in July and higher than market forecasts of USD 66.1 billion. It is the biggest trade deficit since a record high in August of 2006 as imports returned to pre-pandemic levels while exports rose at a slower pace. The goods gap reached a record high of USD 83.9 billion while the services surplus shrank to USD 16.8 billion, the lowest since 2012. Imports increased 3.2% to USD 239 billion, the highest level since February, mainly led by purchases of pharmaceutical preparations; passenger cars; and crude oil while declines were seen for nonmonetary gold and finished metal shapes. Exports increased 2.2% to USD 171.9 billion, with sales rising mostly for nonmonetary gold and soybeans while shipments of semiconductors went down. The trade deficit with China fell 6.7% to USD 26.4 billion.
  • Exports from the United States increased by USD 3.6 billion to USD 171.9 billion in August 2020, the highest level since March, as global demand continued to recover from the coronavirus pandemic shock. Goods exports were up by USD 3.5 billion to USD 119.1 billion on the back of sales of industrial supplies and materials, such as nonmonetary gold; and foods, feeds, and beverages, in particular soybeans. At the same time, semiconductors exports declined. Services exports were little-changed at USD 52.8 billion, as increases in transport, charges for the use of intellectual property and other business services were partially offset by a decline in travel.
  • The IHS Markit/CIPS UK Construction PMI rose to 56.8 in September 2020, up from 54.6 in the previous month and well above market expectations of 54.0. The latest reading pointed to a reacceleration in the rate of activity growth and a sharp increase overall, boosted by home building activity and work on commercial projects. Meanwhile, civil engineering activity fell for the second month running and at the sharpest rate since May. Overall new orders rose the most since before the pandemic-induced lockdown and purchasing activity growth accelerated to the fastest since October 2015. On a more negative note, employment contracted for a seventh consecutive month. On the price front, cost burden inflation slowed for the first time in six months to the weakest since May. Finally, confidence towards the 12-month business outlook was the strongest since February.

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