Markets Remain strong Ahead of Central Banks – S&P up 0.4%
As expected, global markets enjoyed a relatively quiet day yesterday yet the positive momentum from Friday continued into the US session with all the major indices having a solid day ahead of key inflation data and central bank meetings. The Dow closed 0.43% higher, the S&P gained 0.39% and the Nasdaq added 0.20% to leave all three indices near yearly highs less than 2-days ahead of the culmination of the Fed’s last meeting of the year. US treasury yields and the dollar were little changed on the day and Gold dropped back under $2,000 an ounce.
Key Data Ahead of the Fed Meeting
Investors are poised for a potential pivot in the market over the next few days and not in the way that many of them had been using that term in recent months. The much anticipated and hoped for ‘Fed pivot’ may well be put on hold for a while after employment data on Friday disappointed doves and if the inflation data tonight has a similar result, we could see all of the last few weeks moves come undone fairly swiftly. The Fed has long advised that is see’s a resilient jobs market as a foundation for inflation and although there are some signs that there is a turn in the market, Friday’s major numbers indicated that it might take some time to hit underlying inflation, especially with the unemployment rate falling. If the CPI data tonight fails to show signs of receding then expect more gains for yields and the dollar as rate cut hopes get pushed back further into 2024.
Event Calendar Picks up From Today
Scheduled market risk events start to pick up from today for investors and then pick up into a central bank extravaganza later in the week. Australian traders have already heard from RBA Governor Michelle Bullock in this morning’s session, although it was very much a fence sitting operation as far as most market participants were concerned. The European day kicks off with the focus on the UK markets with the latest employment numbers out early in the day, but the main even comes later in the day once New York opens and we get the monthly US CPI numbers – expectation is for a 0.3% increase for the Core number and anything significantly off that will see volatility across products.
