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This Is the Most Boring Market Since December 2014


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 1) The Bank of England Throws Money at the Brexit

The Bank of England is afraid of the Brexit, so they’re throwing everything including the kitchen sink at the problem.

This morning, the BoE cut rates by 25 bps, expanded its QE program by 60 billion pounds, and started a new 10 billion-pound corporate bond purchase plan.

The BoE took a massive hack at its growth forecasts, and now sees 2017 GDP at 0.8% vs. 2.3% previously, the biggest cut in its history.

30-year UK Gilt yields dropped to all-time lows, and European equity markets rebounded intraday.

The UK’s FTSE 100 Index rose 1.6%, while the German DAX was up 0.6%.

2) The Grind Continues

Markets have been in a holding pattern over the past few days ahead of tomorrow’s pivotal NFP report, which could move markets in a big way. (more on this below)

And the S&P 500’s epic boring sideways grind continued today with the index rising 0.02% to 2164.25.

Not 2%, not 0.2%, but 0.02%.

So you have some perspective on the action, the index has not made a 1% move since July 8, and market volatility is even lower now than during the April-May snoozefest.

In fact, S&P 500 volatility hasn’t been this low since December 2014!

Check out this chart of S&P 500 volatility:


No wonder we can't stay awake…

Once again, the Russell 2000 showed a smidge of outperformance,

though biotech (IBB) cooled off after 2 days of solid action.

The Bank of England’s stimulus package pushed up gold and US Treasuries, and crude oil notched a 2.4% gain on what appears to be short covering.

Energy stocks were mixed, but high-yield bonds were strong.  

When crude oil goes up, high-yield energy bonds perform well because default expectations fall.

3) NFP Preview

Traders are expecting a 180K increase on nonfarm payrolls with a 4.8% unemployment rate. (see the full consensus estimates below)

Last month, we saw a huge 107K beat on the headline number, which just about made up for the 122k miss the month before.

Gold and bonds dipped on that report, and then ripped like mad. Equities followed through on the decline in rates with a big 1.5% rally in SPX.

At this point, it seems like it may take a big headline number to get

traders believing the Fed will hike rates — perhaps 250K or more — and it would also help to have the June number revised up.

Click here for my in-depth NFP preview.

Friday's Trading Calendar

US Economics (Time Zone: EDT)

08:30 Trade Balance (Jun): exp. -$43.0b, prior -$41.1b
08:30 Change in Nonfarm Payrolls (Jul): exp. 180k, prior 287k
08:30 Two-Month Payroll Net Revision (Jul): prior -6k
08:30 Change in Private Payrolls (Jul): exp. 171k, prior 265k
08:30 Change in Manufact. Payrolls (Jul): exp. 4k, prior 14k
08:30 Unemployment Rate (Jul): exp. 4.80%, prior 4.90%
08:30 Average Hourly Earnings MoM (Jul): exp. 0.20%, prior 0.10%
08:30 Average Hourly Earnings YoY (Jul): exp. 2.60%, prior 2.60%
08:30 Average Weekly Hours All Employees (Jul): exp. 34.4, prior 34.4
08:30 Change in Household Employment (Jul): prior 67
08:30 Labor Force Participation Rate (Jul): prior 62.70%
08:30 Underemployment Rate (Jul): prior 9.60%
13:00 Baker Hughes U.S. Rig Count (8/5): prior 463
13:00 Baker Hughes U.S. Rotary Gas Rigs (8/5): prior 86
13:00 Baker Hughes U.S. Rotary Oil Rigs (8/5): prior 374
15:00 Consumer Credit (Jun): exp. $16.000b, prior $18.558b

Global Economics

02:00 EUR German Factory Orders m/m
03:00 CHF Foreign Currency Reserves
03:30 GBP Halifax HPI m/m
08:30 CAD Unemployment Rate
10:00 CAD Ivey PMI


Before the Open:

Cognizant Technology Solutions (CTSH)
SouFun Holding (SFUN)

After the Close:

None of significance