US DATA: Dallas Fed Weekly Econ Index Continues Robust Run (Absent Claims Data)
The Dallas Fed's weekly economic index showed 2.40% real GDP growth (scaled to 4-quarter growth) for the week ending Sept 27, an uptick from 2.07% the prior week. That brings the 13-week moving average to 2.42%, which is up slightly from 2.40% prior. As we've noted before, that's consistent with a Q3 GDP SAAR reading above 3%, potentially even close to the 3.9% signaled by the most recent Atlanta Fed. Note Q2 printed 2.08% by the 4-quarter (Y/Y) measure.
- With the federal government shutdown underway however, there is a significant caveat to this indicator: "Initial claims for unemployment insurance are missing for the week ended Sept. 27, and continuing claims for unemployment insurance are missing for the week ended Sept. 20. These values are imputed from the non-missing data and will be replaced with the actual data when it is available."
- Fortunately the index uses mostly non-government provided data (the exceptions are jobless claims from the BLS and EIA data, but the latter is still being made available), so we should still be able to get a sense of underlying activity on a weekly basis from the WEI: "To measure consumer behavior, we include the Redbook same-store retail sales index and the Rasmussen Consumer Index. To measure labor market conditions, we include initial and continuing unemployment insurance claims, the American Staffing Association Index of temporary and contract employment, and federal tax withholding data from Booth Financial Consulting. For production, we include U.S. steel production from the American Iron and Steel Institute, U.S. electricity output data from the Edison Electric Institute, a measure of fuel sales based on Energy Information Administration data, and total railroad traffic from the Association of American Railroads."
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US: Optimism That Americans Can Improve Living Standards Drops To Record Low
A new survey from the Wall Street Journal/AP-NORC has found that “the share of people who say they have a good chance of improving their standard of living fell to 25%, a record low in surveys dating to 1987. More than three-quarters said they lack confidence that life for the next generation will be better than their own, the poll found.”
- The Journal notes: “Nearly 70% of people said they believe the American dream—that if you work hard, you will get ahead—no longer holds true or never did, the highest level in nearly 15 years of surveys.”
- The poll found “a somewhat brightening view of the current economy. Some 44% rated the economy as excellent or good, up from 38% a year ago, though still a smaller share than the 56% who now view the economy as not good or poor.”
Figure 1: “People like me have a good chance of improving our standard of living”
Source: Wall Street Journal, AP-NORC
GBPUSD TECHS: Has Pierced A Key S/T Support
- RES 4: 1.3753 High High Jul 2
- RES 3: 1.3681 High Jul 4
- RES 2: 1.3636 76.4% retracement of the Jul 1 - Aug1 downleg
- RES 1: 1.3550/3595 High Sep 1 / High Aug 14
- PRICE: 1.3399 @ 16:04 BST Sep 2
- SUP 1: 1.3340 Intraday low
- SUP 2: 1.3315 61.8% retracement of the Aug 1 - 14 bull leg
- SUP 3: 1.3249 76.4% retracement of the Aug 1 - 14 bull leg
- SUP 4: 1.3142 Low Aug 1 and a key support
The outlook in GBPUSD remains bullish and recent gains reinforce this theme. However, Tuesday’s sell-off undermines the bull theme and attention is on key short-term support at 1.3391, the Aug 22 low. It has been pierced, a clear break of this level would signal scope for a deeper retracement and expose 1.3315, a Fibonacci retracement. For bulls, a breach of 1.3595, the Aug 14 high, is required to signal scope for a stronger rally.
OPTIONS: Euribor Call Spread Buying Continues
Tuesday's Europe rates/bonds options flow included:
- DUV5 107.20/107.10/106.90p ladder, sold at 3 in 4k
- DUX5 107.50c, bought for 5 in 3k
- ERH6 98.12/98.25/98.4375/98.5625c condor, bought for 3.25 in 5k
- ERM6 98.31/98.43cs, bought for 2.5 in 10k (40k all week)
- SFIU6 97.40/97.50cs, bought for 0.75 in 20k
