Daily Agenda: Treasuries React to Downbeat Earnings Season

Apple iPhone unit sales miss target; Bank of England questions Chinese growth projections; Florida bank announces Cuba branch opening.


U.S. Treasury bonds rose in trading yesterday largely in response to a sharp sell-off in U.S. equities, in turn spurred by weaker-than-expected earnings reports. To date, this quarterly earnings reporting season has taken a downbeat tone. Many companies whose results did exceed forecasts are keeping a cautious tone over macro risk factors and foreign demand. In a note to clients today, Sean Darby, chief global strategist at Jefferies, notes that U.S. equity market leadership continues to narrow with more stocks making 52-week lows versus highs. According to Darby, “The sectors that are leading the indexes are those with forward earnings growth: pharma, biotech and financials, while real economy beneficiaries such as transports and industrials have withered.”

Apple numbers disappoint. Cupertino, California–headquartered tech company Apple announced fiscal third-quarter results yesterday. Revenues surpassed consensus analyst forecasts though iPhone sales came in softer than anticipated. Unit sales for the company’s smartphones tallied at 47.5 million for the period, a 35 percent increase year-over-year but below analysts’ forecasts of nearly 49 million.

Bank of England questions Chinese growth. Bank of England minutes published today unveiled skepticism on the part of the central bank’s policymakers that China will meet its stated 7 percent GDP target for full-year 2015. In the report, officials question whether Beijing’s attempts to spur internal demand will be successful and raised issues over the health of the credit system there.

Greece readies for critical vote. Greek Prime Minister Alexis Tsipras is attempting to secure a parliamentary vote supporting further reforms demanded by creditors. As in the prior austerity vote, a significant portion of Tsipras’ own Syriza coalition is expected to oppose the bill, necessitating the support for right-of-center opposition parties to pass.

BHP Billiton to write down assets. In the latest move by a major commodities producer to cut down asset values, Anglo-Australian mining giant BHP Billiton today announced a write down of between $350 million and $650 million in assets, primarily copper sites. The company also reported that production was up 9 percent for the first half of the year.

Deal with Cuban bank announced. Pompano Beach, Florida–headquartered Stonegate Bank announced yesterday that it will become the first U.S. financial institution to open a correspondent office in Cuba after the recent move to normalize relations between the island nation and the U.S. Stonegate Bank and Banco Internacional de Comercio, based in Havana, announced the agreement to work together in handling monetary transfers of behalf of mutual clients.