Scoreboard: Ceiling cracks

Apparently the US could run out of funds in just over two weeks – again. Yep, the debt ceiling drama is back on air, repeats only. While it’s not causing outright panic, the sluggish action across most markets suggest it might be weighing – if just at the margin. No reason to buy of course. Or maybe that’s because there isn’t a lot of other data or news out. Indeed on the data front we only saw new home sales and sure, these rose 7.9 per cent in August and that sounds awesome. Yet the result only partially reverses a 14 per cent slump the month prior. Moreover, at 421 thousand, new home sales are still below the average (700 thousand-ish) although well above the average through 2011 and 2012. Then we saw durable goods orders which rose 0.1 per cent in August after an 8 per cent fall the month prior. It’s not all bad on that front as the result was stronger than expected. More importantly though, if you strip out volatile items, core orders showed a 1.5 per cent lift in the month which is decent. In both cases the result was good but not good enough given the weakness of prior months to get punters excited.

And then there’s the US debt-ceiling crisis. It’s serious this time apparently and Jack Lew, the US Treasury secretary has imposed a deadline of October 17. At that point he suggests that the US would only have about $30 billion to meet its obligations and may not have the cash to meet its commitments. There is also a warning that if the US budget isn’t passed by October 1 then parts of the government could shut down. Now of course we’ve been here before and deadlines pass and the drama intensifies and then something is sorted – basically because Congress isn’t allowed to let the US default. My understanding is they are constitutionally bound to pay the bills. We’ll see.

For last night the US 10yr bond fell about 3bp to 2.62 per cent and US stocks ended weaker. So at the bell the S&P500 was off 0.3 per cent (1692), the Dow was down 61pts (15273) and the Nasdaq fell 0.2 per cent (3761). By sector, healthcare and consumer stocks were the key underperformers, with financials and basic materials outperforming, the latter getting a boost from a 0.5 per cent lift in copper. Precious metals also rose with gold up $18 to $1334 and silver was 1 per cent higher. Crude bucked that trend, falling 0.7 per cent for the session ($102.4). There wasn’t really much else to the session. Pricewise, AUD is up smalls to 0.9372, euro is up about 50pips to 1.3525 while Yen is at 98.45 for 98.66.

So, looking at the day ahead, the SPI points to a 0.2 per cent fall for our market today and there is little data or news for the region. Tonight we see the breakdown of UK GDP and then another estimate of US GDP. In the second estimate, GDP was estimated to have increased 2.5 per cent year on year, and the consensus expectation is that this will be revised up slightly to 2.6 per cent year on year. Other than that we also get initial jobless claims and pending home sales.

That’s the lot, have a great day…