A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
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Alan Rose Foreign Exchange Senior Trader
With the Thanksgiving holiday approaching and with the government being closed tomorrow, there will be a larger than normal amount of economic reports being released this morning. Every one of the economic reports beat expectations and it is a reminder of the resiliency of the U.S. economy in the face of a trade war that has severely impacted many other major economies. It is also a reminder that the consumer is carrying an increasingly larger burden of GDP which is not a healthy situation over the medium to longer term.
To begin, Q3 GDP was revised higher from 1.9% to 2.1% with the personal consumption component beating expectations at 2.9%. Durable goods orders for October beat expectations by rising 0.6% against expectations of a decline of 0.9%. The capital goods orders non-defense component came in much stronger at 1.2% as did the non-defense ex-aircraft component at 0.8%. Jobless claims also came in stronger than expected at 213,000. Mortgage applications to refinance a home rose 4% for the week and were up 314% from one year ago. Mortgage applications to purchase a home fell 1% for the week and were 55% higher than the same week one year ago.
Despite the data all exceeding expectations so far (more economic data to follow), the market reaction has been muted. U.S. interest rates did initially move higher and are still up on the session, but they are in the process of correcting lower again. Global equities are slightly in green territory and U.S. equities are expected to open nearly unchanged. The U.S. dollar (DXY) is mixed to slightly higher with the two key safe haven currencies (CHF and JPY) weaker along with gold this morning.
Even though the effects of the trade war are negatively impacting our GDP growth rates throughout the year, the combination of the Fed lowering interest three times this year and the continued downward pressure on interest rates has provided a cushion for the economy. Despite manufacturing and farming wearing the brunt of the trade war, other sectors have benefited and the overall economy has been able to continue to expand. It is a good sign as we head into our Thanksgiving Holiday.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
HAPPY THANKSGIVING to all our clients and colleagues!
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