The debt ceiling talks seemed stuck in the mud with most of the commentary saying the two sides are far apart. Having said that, the expectations continue to believe that a deal would be made. When?? . When? and What? are not known however. Will they take it to the wire? Will the government be forced to shut down? If so, what are the implications to the US debt rating?

The wall of worry started to be built and that was reflected in the moves in stocks today especially in the S&P and the Nasdaq indices. Both indices fell over 1.1% with the Nasdaq index falling by 1.26% on the day. The final numbers are showing:

  • Dow industrial average down -0.69%
  • S&P index -1.12%
  • NASDAQ index -1.26%.

The recent high flyers in AI were hit the hardest with Nvidia down -1.57% (they announce earnings after the close tomorrow), Alphabet down -1.99%, and Microsoft down -1.84%.

In Europe, the major indices moved lower led by the Frances CAC which fell -1.33%. The German DAX is lower for the 2nd consecutive day after closing at record levels on Friday. It fell -0.44% today.

The US yields initially moved to the upside but is ending down on the day on some flight to safety flows. There was mixed data today with the Philly Fed manufacturing index remaining negative. The Richmond Fed index was lower than expectations. New-home sales were marginally higher but prices came down. Finally, the US S&P Global PMI flash index was also weaker and below the 50 level at 48.5 signaling contraction.

A snapshot of the yields shows:

  • 2-year yield at 4.318% -0.4 basis points. The Hyatt reached 4.406 basis points before rotating to the downside. The US treasury auctioned off to your notes with international demand strong
  • 5-year yield 3.744% -2.3 basis points
  • 10-year yield 3.697% -2.1 basis points. The high yield reach 3.761% the highest level since March 9
  • 30 years 3.952% -1.9 basis points

In the forex, the JPY and the USD are ending the day as the strongest of the major currencies. The AUD and the NZD are the weakest. Generally speaking, such a move is reflective of a "risk-off" sentiment.

The strongest to the weakest of the major currencies today

Technically, the EURUSD skin the glow from last Friday to trade at 1.0759 and bounced modestly into the close. It is currently trading at 1.0769. Moving below 1.0759 should solicit more selling. On the top side, the falling 100-hour moving average comes in at 1.0802. The 100-day moving average is just above that level 1.08113. Each would need to be broken and stay broken to increase the bullish bias in the new trading day.

The GBPUSD rallied in the New York session after training to the lowest level since April 21 at 1.13723. The high price got close to the falling 100-hour moving average currently at 1.24353, but found willing sellers against that key moving average. The price is currently trading at 1.2415. It will take a move above the 100-hour moving average to increase the bullish bias the 200-hour moving average is at 1.24648 and moving lower. It too would need to be broken to increase the bullish bias.

The USDJPY extended to the highest level since November 2022, but could not sustain momentum. Close support comes in at 138.139. That represents the high of a swing area going back to July 2022. A move back below that level, and then back below the low of the swing area 137.50, would disappoint the buyers looking for increased upside momentum. The 50% of the range since the 2022 high, comes in at 139.574.

The Reserve Bank of New Zealand will announce her interest-rate decision later on in the new trading day (10 PM ET). The expectations are for 25 basis points but if there is a surprise it is likely to be 50 basis points. For a discussion of the technical levels in play, click here.

In other markets as the day comes to a close:

  • Crude oil is higher by $1.58 or 2.19% at $73.62. Its high price stalled in a key swing area ceiling.
  • Gold is trading up $6 or 0.30% at $1975.18.
  • Silver is trading down $0.20 or -0.86% at $23.44
  • Bitcoin is trading up but off earlier levels at $27,234