US Stocks Surge After Another Data Miss – Nasdaq up 2%
US indices printed fresh record highs again yesterday as another weak data print in the US pointed to swifter easing of interest rates from the Fed. Tech stocks and AI companies led the way again with the Nasdaq and S&P both closing at record highs, gaining 1.96% and 1.18% respectively, the Dow had a much slower day, adding just 0.25% by the close. US treasury yields fell again with the rate sensitive 2-year losing 4 basis points to 4.731% and the 10-year dropping another 5 basis points to 4.289%. The dollar was again relatively stable on the index, but both Cad and Yen saw big moves on the day, the Cad especially after the Bank of Canada started its easing cycle as expected. Oil regained some of its recent lost ground, Brent up 1.2% to $78.41 and WTI up 1.1% to $74.07 a barrel, whilst Gold also pushed higher again, up 1.2% to close the NY session at $2,355 per ounce.
Jobs Data Aligning for Fed Cuts
We’re over halfway through a big trading week now and the stars are starting to align for Fed doves as far as US employment data is concerned. US stock indices exploded last night after the ADP data came in 20k worse than expected, lifting expectations for a weaker non-farms print on Friday and hopes for earlier cuts from the Fed. We still have the weekly unemployment claims numbers out tonight and the big number on Friday but if we do see poorer numbers across the board this week it will be a big piece in the Fed’s puzzle to help them to make that elusive first rate cut. The market is now pricing in a 69% chance of that cut coming in September and if we do get a significantly lower number than the expected 186k increase on Friday night, then those odds will increase further.
Markets Driving Higher in the Weekend
Asian markets are due to open in a positive mood today after another record-breaking day on Wall Street overnight. There is very little on the event calendar to interfere with that positive momentum and investors will be looking for levels to buy for most of the session. It is a different story later in the day as the focus will be squarely on the ECB and their anticipated first rate cut soon after the London open. Traders are expecting to see more volatility around the statement and the press conference with a 25-bps cut well priced in. The US session should be quieter and investors will be hoping for more of the same as yesterday although we do have the usual weekly unemployment claims data out as well as the Ivey PMI number in Canada
