A.M. Update

Good Morning.

Once again there was some trouble in China, however not quite as bad as earlier this week. I think the weakness overnight, -1.13%, has probably been made in to a bigger deal than it is because of the overall tone of the market the month of July which was the worst performance since 2009 and the worst performing index of the 93 larger global indexes Bloomberg tracks.

As for the tone across Europe and most of the other large averages overnight and this morning so far, it's fairly decent, small gains, but mostly green.

US equity futures were flat overnight , but got a bump this morning as the Employment Cost Index came in at the worst print in its history. The USD and USD/JPY promptly sank lower with Index futures higher on the data as rate hike expectations were pushed out further on the data.

Employment Cost came in at .2 on consensus of .6 and a last of .7.

Here's what Bloomberg had to say,

"In a shocking result, the employment cost index rose only 0.2 percent in the second quarter which is far below expectations and the lowest result in the 33-year history of the report. Year-on-year, the ECI fell to plus 2.0 percent which is among the lowest readings on record from 2.6 percent in the first quarter. The record low for this reading is plus 1.4 percent back in the early recovery days of 2009 when, apparently unlike today, there was enormous slack in the labor market.

The report's two components both fell back sharply with wages & salaries moving down to plus 0.2 percent from 0.7 percent in the first quarter and benefits at plus 0.1 percent vs the first quarter's plus 0.6 percent. Year-on-year, wages & salaries are up 2.1 percent with benefits below 2.0 percent at 1.8 percent.

This report, which is very closely watched by policy makers, may very well unsettle the outlook for the Fed's rate liftoff, pushing expectations to the December FOMC from the September FOMC. For the inflation outlook, wage pressures are supposed to be an offset to still weak commodity prices. The Fed's 2 percent goal for core inflation is looking elusive."

 ES 1 min pushing higher on lowered rate hike expectations on the bad data.

 The $USDX falling on the data

And taking down USD/JPY with it which should be an interesting dynamic come the cash open.

The $USD weakness helped push oil off overnight/a,m, lows after the head of OPEC said there wouldn't be a production cut.


We'll see where the cash market takes us, whether or not there's an op-ex pin and how the UISD/JPY's decline effects the market. There's a big stew of contradictory indications this morning and some weekly events that could make today a little more interesting for mew than the usual op-ex Friday.

At 2 p.m. we still tend to get the best data of the week in to the close.