LIVE MARKETS Trade balance, NFIB, consumer credit: The demand/inflation tango

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  • Most major indexes turn red, but bounce off session lows
  • Healthcare is the worst performer in the S&P sector, energy jumps
  • The Euro STOXX 600 index slides ~0.9%
  • Dollar slips; gold, bitcoin gain; raw jumps
  • The 10-year US Treasury yield rises to ~1.85%

March 8 – Welcome home to real-time market coverage from Reuters reporters. You can share your thoughts with us at [email protected]

TRADE BALANCE, NFIB, CONSUMER CREDIT: DEMAND/INFLATION TANGO (1030 EST/1530 GMT)

Data released on Tuesday — and Monday evening — tells market watchers what they already knew: Demand is robust, circling around a slowly recovering supply chain.

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The gap between the value of goods and services imported into the United States and those of domestic origin exported abroad (USTBAL = ECI) widened more than expected in January to $89.7 billion, the largest deficit ever recorded. Read more

The Commerce Department’s reading was $2.6 billion above consensus forecast and was driven by surging imports as demand in the United States continued to outpace the rest of the world, a situation that could be bad news. bodes well for economic growth in the first quarter.

“Net exports have weighed on GDP over the past six quarters and early data suggests another negative contribution in the first quarter,” writes Rubeela Farooqi, chief U.S. economist at High Frequency Economics, adding that “in Overall, trade flows are at historic highs despite supply chain disruptions and logistical challenges.”

“The deficit is poised to remain high for now due to continued strong import demand,” Farooqi said.

The closely watched merchandise trade deficit with China remained stable at $36.4 billion.

Trade balance

In a separate report, small business owners got grumpier in February, according to the National Federation of Independent Businesses (NFIB). Read more

The NFIB’s trade optimism index (USOPIN=ECI) fell 1.4 points to land at 95.7, the sourest reading since January 2021, weighed down by inflation fears.

“Inflation continues to be an issue on Main Street, leading more homeowners to raise selling prices again in February,” said NFIB chief economist Bill Dunkelberg.

The percentage of respondents identifying high inflation as their biggest problem hit a 42-year high, and the net percentage of participants raising average selling prices hit a 48-year high.

But it’s not all bad news, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“Investment intentions are down two points but are holding up well and are consistent with the view that business fixed investment will grow at a double-digit pace over the next year,” he wrote.

It should be noted that the NFIB is a politically active membership organization, and the index was last lower the month President Joe Biden was sworn in.

NFIB

Finally, in older news, on Monday afternoon, the Federal Reserve released its Consumer Credit Outstanding (USCRED=ECI) data, which rose $6.84 billion, marking an unexpected deceleration. and missing estimates of a country mile.

Economists expected total consumer credit debt to accelerate by $23.8 billion in January.

Total consumer credit outstanding currently stands at approximately $4.4 trillion.

An increase in non-revolving credit, which includes large items such as automobiles and tuition fees, did the heavy lifting, as revolving credit, or credit card debt, remained essentially unchanged.

This goes a bit against the trend; credit card spending has long since surpassed pre-pandemic levels, while non-revolving credit, a smaller slice of the total pie, has yet to recoup the ground lost to COVID.

It pays to remember that outstanding credit is not the same as consumer spending. A high savings rate has left the average consumer with plush piggy banks and fat wallets.

Outstanding consumer credit

After a green start, Wall Street turned around in morning trade, extending Monday’s selloff, which confirmed a correction for the Dow and a bear market for the Nasdaq.

Crude prices continued to climb, taking energy stocks (.SPNY) with them.

(Stephen Culp)

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NASDAQ 100 FUTURES: FIGHTING TO HOLD THE FEBRUARY LOW (0900 EST/1400 GMT)

The CME e-mini Nasdaq 100 futures have been beaten pretty hard over the past three trading days. In fact, they ended Monday at their lowest level since mid-May 2021, sending them down 19.6% from their November 19 closing record.

It should be noted that the Nasdaq Composite (.IXIC) ended Monday down 20.1% from its record close on November 19, officially putting it in bearish territory.

The overnight action saw the futures fall as low as 13,103.25, before falling back. With this reversal, futures have yet to breach their February 24 intraday low at 13,025.75:

NQcv103082022

Meanwhile, the daily RSI, at just over 30.00, is trying to stabilize above its February 23rd low at 27.90. If so, this momentum indicator will have the potential to establish a second higher low from its late January low of 17.533.

Such convergence could signal the building of positive momentum and, therefore, the potential for a surprise reversal to the upside.

In this case, however, the futures should still face strong resistance in the form of the descending 30-day moving average (DMA) which constantly caps its strength from the beginning until mid-January.

Additionally, since late November, the RSI has exhibited bearish behavior as it was unable to muster enough strength to reclaim the 70.00 overbought threshold.

So regardless of strength, traders will be watching future action closely against the 30-DMA, as well as the RSI, to build confidence in the sustainability of any rebound. Read more

On a break of 13,025, next support is at the mid-May low of 12,896. This is just ahead of the 38.2% Fibonacci retracement of the entire March-2020/November advance. 2021 at 12,873.57.

(Terence Gabriel)

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Terence Gabriel is a market analyst at Reuters. Opinions expressed are his own.

Our standards: The Thomson Reuters Trust Principles.

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