"This will transpire even in the face of what is likely to be a markdown to the Fed's economic forecast. In other words, for all the talk about data dependency, whether they taper or not or how soon will not merely be about the data."
- Tom Porcelli, chief US economist at RBC Capital Markets
U.S. manufacturing and construction spending rose more-than-expected, hinting the world's biggest economy was picking up steam, and potentially reinforcing views the Fed will soon taper its unprecedented asset-buying programme. Manufacturing sector expanded last month at its fastest pace in more than two years, with the ISM index for national activity reaching 55.7 in August compared to 55.4 a month earlier, overshooting analysts' expectations for the reading of 54. The positive manufacturing data accelerated a slide in Treasuries prices on Tuesday, with 10-year bonds falling down one point and 30-year notes down two points. New orders also touched its best level in more than two years, with the respective sub-index increasing 63.2, up from 58.3.
While the economy is showing signs of stabilization, President Barack Obama is facing a tough opposition in Congress to approve the military strike on Syria over the weekend. He also pledged to ignore Congress even if they vote no to military intervention, while promised to launch the attack anyway. According to majority of analysts, it is 50/50 on whether the Congress will give Obama permission to launch an attack. Nevertheless, several Democrats already pushed back against military action, reflecting political disputes not only between Democrats and Republicans, but within the leading party as well.
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