Faber News Flow

Against hope-filled expectations of 0.08 print, Chicago Fed's National Activity Index disappointed once again, down 0.02 in June. This is the seventh month of declines in a row - the longest streak of contraction since the financial crisis. 36 indicators improved  from May to June, while 49 indicators deteriorated  (but of the indicators that improved, nine made negative contributions). 40 of the 85 monthly individual indicators made positive contributions, while  45 indicators affected the index negatively. Need to See Some Repricing of Global Stock Markets, Says Natwest's McCormick Only the 'employment'-related indicators suggested growth in June... And this is all happening with stocks at record highs?

US equity markets and bond yields are rising after Bloomberg reports, according to a person briefed on the discussions, that Congress and the White House are finalizing an agreement that would raise the debt limit until July 2021 and increase government spending for two years. However, the short-term Bill curve remains 'kinked' around the debt-ceiling X-date for now... Mnuchin Says Debt, Budget Deal Is Close, Expects China Call This Week Time is running short  for the House to vote on the deal before they leave for a six-week recess on July 26. If the budget negotiations can't be concluded in time, lawmakers may decide to pass a debt ceiling extension into October. That would avoid the risk of a default in the short-term but would extend uncertainty for markets.

As the midsummer sun rises, those traders who are not on vacation brace for an extremely busy week that includes the first of two big central bank meetings in the remainder of this month with the ECB meeting, as well as a barrage of US corporate earnings. The latest flash PMIs around the world and Q2 GDP in the US are the data highlights while earnings season really starts to ramp up in the US. In the UK we'll also get official confirmation of who the next Prime Minister is. But the highlight of this week will be the much anticipated ECB meeting on Thursday. At Sintra last month Draghi laid the foundations to make further policy easing feel less conditional, although Wall Street is split on when Draghi will actually make a formal announcement with Deutsche Bank believing that September is the natural occasion for the big decisions and details however some preparation is anticipated at the meeting next week. They expect  the "or lower" easing bias to be reintroduced into r...

0, 25, or 50bps next week? Will Draghi leave Lagarde a rate-cut gift (or start buying stocks)? Those are the questions the market is asking and judging by the markets' response, it's moar of whatever hasn't worked til now... And the short-end is implying a 20% chance of 50bps next week (down from over 71% just after Williams spoke)... Trichet Says ECB Has the Right Policy Tools But, despite the desperate jawboning last last week, to rescue market expectations back from Williams' "academic" warnings, former fund manager and FX trader Richard Breslow notes that  now that rate cuts and dovish talk are firmly on the agenda, it's hard to think of anything, at this point, that might derail the ECB or the Fed.  And we certainly know the mindset of the PBOC and the BOJ. Which raises the question of whether economic data releases mean anything or not?  With momentum having stalled in several major asset prices, it's easy to conclude that they don't. But the...