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Amazon's influence sweeps across asset classes, China reclaims top spot as foreign Treasuries owner, and American CEOs sour on U.S. CEO-in-Chief. Here are some of the things people in markets are talking about.
Retails from the Crypt
U.S. retail sales posted their largest advance of the year in July—but someone forgot to tell investors. The SPDR S&P Retail ETF suffered its worst loss since February amid disappointing results from Advance Auto Parts Inc., Coach Inc., and Dick’s Sporting Goods Inc. Jeff Bezos's fingerprints were all over the market moves seen Tuesday, thanks to Amazon's launch of a $16 billion bond offering and data showing a jump in nonstore retail sales. The S&P 500 Index inched lower on the session, with Treasury yields and the Bloomberg Dollar Spot Index rising.
Back on Top
China is once again the top foreign owner of U.S. Treasuries after boosting its holdings to $1.15 trillion in June, its fifth straight monthly increase, to surpass Japan. As China buys U.S. government debt, domestic corporates are also issuing more of their own—bringing borrowing out of the shadows in the process. The IMF warned that Chinese debt is poised to surge to almost 300 percent of GDP by 2022 while upgrading its near-term growth forecast for the world's second-largest economy.
On Tuesday, U.S. President Donald Trump said there was “blame on both sides” for the deadly violence at a white supremacist and neo-Nazi rally in Virginia that resulted in the car-ramming killing of a counter-protester. An alleged member of one of the right-wing groups was charged with murder. Trump defended his decision to wait before specifically condemning racist groups. Many of corporate America's leaders joined Merck CEO Kenneth Frazier in stepping down from White House advisory councils following Trump’s hesitation. The president tweeted rebukes, saying the councils were no place for “grandstanders.” Here's a tracker of how the members of Trump's manufacturing council and strategic and policy group have responded. A poll average from Real Clear Politics shows Trump's net approval rating falling to -20.4 percentage points, its lowest level since the inauguration.
“Game On” or Dialogue
South Korean President Moon Jae-in reserved the right to veto any military action against his northern neighbor in a speech Tuesday, a statement that contrasts sharply with U.S. President Donald Trump's threat to unleash "fire and fury" on North Korea. Moon's remarks came after U.S. Defense Secretary Jim Mattis warned that it would be "game on" for war if Kim Jon Un struck America with missiles. U.S. Secretary of State Rex Tillerson, meanwhile, told the press that officials "continue to be interested in finding a way to get dialogue" with the regime, but that it would be up to Kim. State news from North Korea suggested any strike near Guam, which the regime had threatened, wasn’t imminent. A day after meeting with Moon, U.S. Joint Chiefs of Staff Chairman Joseph Dunford spoke with Fang Fenghui, a member of China's central military commission.
Tech behemoth Tencent Holdings Ltd., which is being probed by China's online watchdog, is scheduled to report earnings Wednesday, with investors looking to see whether its risky bets are bearing fruit. The day's economic calendar is fairly light, with Australia's Westpac leading index for July and wage price index for the second quarter due out, as well as a Bank of Thailand interest rate decision. S&P/ASX 200 and Nikkei 225 futures are little changed ahead of the open after the regional benchmark gauge climbed again on Tuesday.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Abe’s biggest rival is likely within the LDP.
- Inflation outlook making BoE rate hike a tough sell.
- Dim Sum market may go dormant as Panda bonds boom.
- Global shipping industry rebounds.
- Old ideas about trade are going out the window.
- Canadian home prices suffer biggest drop since 2008.
- The end of Athleisure?