CANADA DATA: CFIB Small Business Sentiment Recovery Stalls
The CFIB 12-month Business Barometer fell back below the 50 mark demarking contraction from expansion in August, to 47.8 from 51.5 in July. This was the first decline after 4 consecutive strong improvements for this index, which surveys Canadian small businesses and has a (very) rough correlation with national GDP growth.
- The report noted that "insufficient demand" was the biggest problem for small businesses. Sectoral weakness was broad, per the CFIB: "Retail, manufacturing, personal services, transportation and warehousing, as well as insurance, real estate, and financial services, continue to lag below the 50-point mark."
- That said, hiring intentions improved (15.9 increase, 14.3 decrease - vs 11.9 / 15.6 respectively in July), while inflationary metrics were steady (average price plans 2.7% and wage plans 2.1% each for a 2nd consecutive month).
- This survey is volatile but suggests that improvement in private sector sentiment has stalled from the recent improvement, coming after the trough seen amid the height of the (still-ongoing) US-Canada trade dispute.
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US: Trump Admin Spotlights Business Equiptment Production As Growth Indicator
Trump administration economists are spotlighting a little-noticed piece of federal data on production of business equipment that “they argue shows a business investment surge is in the works — one that could have lasting consequences for U.S. growth”, according to Axios.
- Axios notes: “Industrial production of business equipment is an early indicator of capital spending — investments in property, equipment and technology — that ultimately fuels higher productivity and higher incomes."
- Axios adds: “Production of business equipment in the second quarter averaged 7.9% higher than in the final three months of last year, which works out to a 16.5% annual rate. That was the highest two-quarter rise since 1997, other than in the immediate pandemic bounce-back in 2020.”
- Axios has “learned that Treasury officials will soon begin highlighting this data as a key economic achievement of the administration… Trump administration officials view increasing business capital investment as the linchpin of their economic agenda, including ultimately driving gains in blue-collar wages.”
PIPELINE: Corporate Bond Update: $1.5B Wells Fargo 2031-Tap Launched
- Date $MM Issuer (Priced *, Launch #)
- 07/22 $Benchmark General Electric 5Y +47, +10Y +62
- 07/22 $Benchmark NY Life 3Y +40, 3Y SOFR+66
- 07/22 $1.5B #Wells Fargo 2031-tap +72
- Expected Wednesday:
- 07/23 $Benchmark JFM (Japan Finance Org for Munis) 5Y SOFR+68a
EURUSD TECHS: Support Remains Intact
- RES 4: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1899 2.0% 10-dma envelope
- RES 2: 1.1851 High Sep 10 2021
- RES 1: 1.1750/1829 High Jul 10 / 01 and the bull trigger
- PRICE: 1.1707 @ 15:45 BST Jul 22
- SUP 1: 1.1557 Low Jul 17
- SUP 2: 1.1525 50-day EMA
- SUP 3: 1.1446 Low Jun 19
- SUP 4: 1.1405 Low Jun 11
EURUSD has recovered from last week’s 1.1557 low, on Jul 17. Recent weakness is considered corrective. Support to watch lies at the 50day EMA , at 1.1525. A clear break of this average is required to signal a stronger reversal. For now, trend indicators continue to highlight a dominant uptrend. A stronger resumption of gains would open 1.1829, the Jul 1 high and the bull trigger.
