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Scottish Independence Vote Boosts Dollar, Continues to Pressure Risk Assets


Today's financial recap and tomorrow's financial outlook.

A major catalyst overnight was an updated opinion poll of Scottish voters that saw more wanted to seek independence from Britain, by a scant two point margin. The referendum vote is scheduled for September 18. Previously there had been a sizable margin of voters who did not want to. The most acute reaction was seen in the British pound sterling, which suffered a 3.5 sigma loss versus the US dollar and reached its lowest level of the year. It originally caused a sizable rally in US Treasuries, the 10-year yield fell as much as 3.5bps, but those gains were entirely reversed by mid-day. Most UK stocks closed negative with the FTSE 100 (UKX) down 0.30%.

The S&P 500 (SPX) was broadly lower today with nine of the 10 basic sectors closing negative. Energy stocks were the worst off with brent falling below $100 a barrel during the day and weighing heavily on many international producers. Iron ore producers were also weaker following a decline in import volume from China's August trade data. The Nasdaq indices closed in the positive as many tech stocks rose ahead of tomorrow's Apple (AAPL) product announcement event. At the end of the day the benchmark index hugged the 2,000 level and closed down 0.35%.

Consumer credit rose by $26 billion in August, the most since 2009, and well ahead of the $17.35 billion. The gain was boosted by large jumps in both consumer loans and credit card debt.

Tomorrow's Financial Outlook

The main event tomorrow will be the Apple (AAPL) product announcement where a larger screen iPhone is expected in addition to the possibility of a Smartwatch or other products. Apple has rallied more than 16% since the beginning of May in anticipation of this event and the expected revenue from the new products. It is also the largest component of the S&P 500 and Nasdaq-100 (NDX), so its price action tomorrow will play a pivotal role in the index performance.

The July JOLTS job report will be released in the morning, typically viewed as the truest display of underlying health of the job market. Fed Board Member Tarullo will speak to the Senate Banking Committee at 10:00 a.m. EDT.

There is a large array of global economic data scheduled for tomorrow, but the most important will come from the UK. Bank of England Governor Carney will speak in Liverpool tomorrow addressing the Trades Union Congress. Additionally, his country's trade balance, industrial production, and GDP estimate from August will be reported. Considering that the 10-day volatility of the GBPUSD FX cross reached its highest level in years recently, there is likely more ahead.

Earnings reports tomorrow are scheduled from Barnes & Noble (BKS), HD Supply Holdings (HDS), and Palo Alto Networks (PANW).

Twitter: @Minyanville

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