US Stocks Hit After More Hot Inflation Data – Nasdaq Down 0.8%
US Stock indices took a step back again on Friday as markets got their second hot inflation print of the week. PPI data came in much stronger than expected and fears that the Fed may push out their first rate cut hit stocks, the Dow closed 0.37% down on the day followed by the S&P which was 0.48% lower and the Nasdaq which lost 0.82%. The dollar had a whippy day, initially rallying strongly before ultimately closing close to flat. US treasury yields did push higher as would be expected, the rate sensitive 2-year gaining 8.6 basis points to trade up to 4.654% and the 10-year adding 5.3 basis points to 4.293%. Oil and Gold both shrugged off the stronger data and gained by the end of trading, Brent up to $83.50 a barrel, WTI to $79.20 a barrel and Gold trading back above $2,012 per ounce.
FX Traders Play their Own Game After Strong Data
The foreign exchange market had an unexpected reaction to much stronger than expected inflation data on Friday with the dollar ultimately closing the day close to flat. Both headline and Core PPI numbers came out much better than expected, printing up 0.3% and 0.5% respectively against expectations of just a 0.1% increase for both. Other markets reacted in line with the data with treasury yields pushing higher and stocks taking a hit, but the dollar lost ground in the afternoon after gaining initially on the data. Some traders are blaming today’s Presidents Day holiday on the muted reaction as intra-day flows dominated those fundamentals, or the possibility that the FX world was just under impressed with prints and needs more evidence before it can take the greenback higher. It is a relatively quiet event risk week ahead and traders are now looking to see if the dollar will jump into a new trend or if we have more rangebound days ahead of us.
Quiet Start to the Trading Week
It is set to be a quiet start to the trading week with very little on the event calendar today to pique investors’ interest. If you throw the holidays in the US and Canada on top of that and the anticipated lower liquidity, then many traders will be looking to rangebound conditions for the three trading sessions ahead today. Asian markets will have a bit of a shot in the arm as Chinese markets reopen for the first time in a week with traders anticipating some gains in the onshore stock markets after data has indicated good sales over the Lunar New Year period. However overall, unless we see something big hit the newswires, expect markets to remain fairly subdued.
