US stock markets are looking for a flat open after the S&P 500 moved up 0.78% yesterday, but prices could change quickly depending on the outcome of two data releases an hour before the bell. The news is set to be mixed: the monthly trade deficit is expected to expand to $28 billion in July as imports rise faster than exports, but the weekly labor data should show 20k fewer people filing for first-time jobless claims.

Globally, equities have been turning in both directions. Asia saw the Nikkei soar 1.95% and the Hang Seng climb 1.05%, but China’s Shanghai Index moderated by 0.73% following steady gains in the prior seven days. In London, the FTSE 100 is currently trading down 0.60% after news that the Bank of England was holding the key interest rate at 0.50%. In France, the trade deficit posting its narrowest margin in four years, but the CAC 40 is trading down 0.36% as investors put more weight on the weaker-than-anticipated industrial production figures.

Gold, after inching past the $1,000 mark earlier in the week, has fallen $5 to $986, while the US$ index is slowly climbing this morning after touching a 2009 low on Tuesday.  Commodities, meanwhile, are a bit weaker: oil up just 0.3% at $71.50, while base metals are down 1%-3%, and grain prices are flat.

Key Releases Today:

8:30 ― In June, the US trade balance expanded by $1 billion to -$27 billion, as imports (+2.3%) advanced at a faster rate than exports (2%). In July, exports are expected see another gain, suggesting a sense of stabilization in the global economy. Yet imports are set to advance at a faster pace once again, driving the monthly deficit up another $1 billion to $28 billion.

Analysts at IHS Global Insight believe it could even increase to $30 billion. “Both export and import volumes should increase, signaling a welcome revival in world trade activity,” they said. “But we expect that export growth will be restrained by a decline in aircraft exports, while import growth should be boosted by an influx of autos and parts as domestic vehicle production ramped up. As a result, imports should bounce more than exports, and the deficit should widen.”

8:30 ― Many analysts believe the recession technically ended in May, but with fresh jobless claims coming in each week, it won’t feel like the economy is truly recovering for many more months. The 4-week average of new claims for unemployment benefits was 571,250 in August, 11k higher than the pace in June but still a hefty decline from the 616k pace in June. There’s still a long way to go: the weekly number has to fall to 360k or so to be consistent with growth in the labor market.

“Jobs are still being lost in just about every cyclically sensitive sector of the economy, but the panic induced by the Lehman bust has long since subsided,” said HFE’s Ian Shepherdson. “What remains now . . . is an extended labor market adjustment to the new economic reality, which is that even a modest pace of expansion is dependent on public policy assistance.”

Treasury Auctions:

1:00 ― 30-Year Bonds

Despite the gain in equities, demand for bonds hasn’t faltered: the benchmark 10-year yield is currently trading a few points lower at 3.47%.