[Platinum Insights] (8.18.23)

Good morning.

U.S. stock index futures edged lower on Friday after a three-day selloff on Wall Street, as evidence of a resilient U.S. economy spurred fears that the Federal Reserve would hold interest rates for longer than previously expected.

The Labor Department’s report on Thursday showed claims for state unemployment benefits fell -11K to 239K, stronger than expectations of 240K, indicating resilience in the labor market. Also, the U.S. Philadelphia Fed business outlook survey rose to a 16-month high of 12.0 in August, stronger than expectations of -10.0.

The relative strength of the U.S. economy is prompting fears of rates sticking higher for longer across the Atlantic and a potential shift from the current easing of inflationary pressures. This is reflected in a big surge in U.S. government bond yields. The yield on the 10-year Treasury note hit a ten-month high of 4.328% in the previous session and came within a whisker of its highest level since 2007.

Risk sentiment has also been hurt in recent days by China’s sluggish economic recovery and growing concerns about its property market. U.S.-listed shares of Chinese companies JD.Com and Alibaba Group fell 3.6% and 2.4% respectively. Embattled developer China Evergrande Group has filed for bankruptcy protection in a U.S. court as part of one of the world’s biggest debt restructuring exercises, as anxiety grows over China’s worsening property crisis and a weakening economy.

Estee Lauder and Deere & Co are among companies scheduled to report quarterly earnings before the bell.

WTI crude futures steadied above $80 per barrel. Gold held below $1,900 an ounce while the yield on the 10-year Treasury slid to 4.22%.

In regular trading on Thursday, the Dow fell 0.8%, the S&P 500 lost 0.8% and the Nasdaq tumbled 1.2%. The VIX closed up above 18 on Thursday.

Have a great weekend