Futures Flat, Global Stocks Rise As Treasury Yields See Biggest Monthly Jump In Over A Year

The August market doldrums were on display on the last day of the month, where just two days ahead of the August payrolls report which the Fed is allegedly watching closely to decide whether to hike rates, S&P futures were fractionally lower on non-existent volume, while both Europe and Asia were modestly in the green; ten-year Treasury yields headed for the biggest monthly jump in more than a year while the dhe dollar gained for a sixth day against the yen in the longest winning streak since March. European stocks advanced for a second day, adding to a monthly gain as oil trimmed its advance in the best month since April.
In terms of notable movers, Deutsche Bank ( 3%) and Commerzbank ( 4%) stole the early session the headlines after Manager Magazin reported that that Deutsche Bank were mulling a merger (adding that s considerations were ‘only of a theoretical nature’ and at a very early stage), and while the CEO stated that he does not believe this is an option, shares shrugged this off and continued to lead the way higher in Europe.
CEO John Cryan said Germany’s largest lender is looking to shrink in size, when asked about a media report that it considered merging with rival Commerzbank AG.’Part of the work we’re doing is to make our bank a bit smaller, to make it a bit simpler,’ Cryan said at a conference in Frankfurt on Wednesday, when asked whether the German lender is looking for a merger partner. Deutsche Bank, which runs Europe’s largest investment bank, has lost about 42 percent in market value this year as Cryan struggles to shore up capital and reverse losses. As part of his restructuring plan introduced last year, the CEO announced thousands of jobs cuts, sold risky assets and suspended dividend payments. ‘A merger between the two is unlikely,’ said Chris Wheeler, a London-based analyst at Atlantic Equities. ‘There would be major competitive concerns. It would be looked upon by many people as negative news.’
The Asian session was uneventful with the most significant moves once again reserved for Japan where the Nikkei closed up 1%. Those gains have come after industrial production in Japan (0.0% mom vs. 0.8% expected) printed well below expectations and so keeping the pressure on the BoJ. The Yen was trading just shy 103.3 at last check following recent speculation that the BOJ may monetize foreign debt. The rest of Asia was more mixed. The Hang closed down 0.2%, the Shanghai Comp 0.4% and the ASX (-0.8%) was in the red.
The Bloomberg Dollar Spot Index is poised for its first monthly gain since May as prospects for higher U. S. borrowing costs widened the policy divergence with Europe and Japan, where central banks stand ready to add to unprecedented stimulus. A private report on jobs growth on Wednesday, ahead of Friday’s monthly payrolls, may provide insight on whether the economy is strong enough to withstand a rate increase as early as next month after Fed Vice Chairman Stanley Fischer said on Tuesday that any rate hike in September will be data dependent. “The dollar has been ‘supported by the recent, more hawkish comments from the Fed which have signaled that the Fed is moving closer to resuming rate hikes,’ said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. ‘The key will be the incoming economic data.’

This post was published at Zero Hedge on Aug 31, 2016.