? Treasurys steady ahead of U.S. employment data.
? European stocks shrug off Asian weakness.
? Italian bonds fall before budget discussions.
? S&P 500 set to open flat.
Benchmark 10-year Treasurys were broadly stable and the dollar picked up against major currencies as investors await the latest U.S. employment and payroll data. Italian government bonds fell ahead of ministers' budget discussions. European stock markets failed to track Asian weakness, and futures point to a flat opening for the S&P 500.
Ten-year Treasury yields were down less than 1 basis point to 2.978% as of 6:45 a.m. ET. "Treasurys now turn to today's July payroll report for direction ahead of the weekend," TD Securities noted, adding that it believes "curve flattening will persist amid ongoing rate hikes and the Bank of Japan's defense of [the yield curve control]."
"Today's U.S. employment report is likely to reinforce the hawkish narrative of the U.S. central bank," said Michael Hewson, chief market analyst at CMC Markets UK. "Once again it will be the wages data that will help to determine the direction of the U.S. dollar."
The dollar spot index edged up 0.08% to 95.2440. The yen was down 0.04% against the U.S. dollar while the euro was trading 0.09% lower.
"What should be another U.S. solid jobs report today will embolden the White House in its policy of squeezing trade concessions out of China," Chris Turner of ING Research said in a note. The Chinese yuan depreciated 0.36% against the dollar.
Sterling fell 0.15% against the dollar as data showed the U.K.'s services sector growth dipping to a three-month low in July, and after the Bank of England raised its benchmark rate in a unanimous vote yesterday. "Investors appear to be expecting virtually no more tightening this year or next, whereas our forecast is for three more 25 [bps] rate hikes in that time as the U.K. economy holds up fairly well," Capital Economics wrote. "This would be consistent with the [central] bank's guidance that "limited and gradual" increases are likely."
Italian government bonds tumbled, with 10-year yields climbing more than 7 basis points to 2.99%, having breached 3.0% earlier in the day ahead of ministers' budget discussions in Rome and amid concerns that Economy Minister Giovanni Tria could be forced to resign. German Bunds gained as 10-year yields dropped more than 3 basis points to 0.428%.
The Euro Stoxx 50 rose 0.40% while the FTSE 100 added 0.69%. Royal Bank of Scotland Group PLC shares rose 3.36% after the bank announced plans to pay its first dividend in 10 years.
Overnight in Asia, the Shanghai SE Composite fell 1.00% and the Hong Kong's Hang Seng index dipped 0.14%.
Futures point to the Nasdaq 100 index opening about 0.13% higher today after the tech-heavy Nasdaq Composite climbed 1.24% yesterday. Apple Inc. became the first publicly traded U.S. company to hit market capitalization of $1 trillion, driven by the positive reaction to its latest quarterly earnings.
Brent crude oil dropped 0.37% to $73.18 per barrel on the ICE Futures Exchange.
"OPEC and non-OPEC, essentially Saudi Arabia and Russia are making good on their commitment to boost output, and U.S. oil inventories unexpectedly rose," Brown Brothers Harriman wrote.
Gold dropped 0.35% to $1,215.80 per ounce.
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The day ahead:
8:30 a.m. ET — U.S. employment situation (Econoday consensus: non-farm payrolls 190,000 monthly, unemployment 3.9%, average hourly earnings 0.3% monthly, participate rate 62.8%)
8:30 a.m. ET— U.S. international trade (Econoday consensus: $45.6 billion deficit)
8:30 a.m. ET — Canada merchandise trade
9:45 a.m. ET — U.S. PMI services index (Econoday consensus: 56.3)
10 a.m. ET — U.S. ISM non-manufacturing index (Econoday consensus: 58.8)
11 a.m. ET — Global composite PMI
11 a.m. ET — Global services PMI
1 p.m. ET — U.S. Baker-Hughes rig count