US Markets Steady After Trump and Powell – Dow up 0.5%
US markets responded to both the weekend’s shooting incident and a more cautious update from Fed Chair Jerome Powell yesterday, resulting in major indices moving higher with some mixed results in other markets. The Dow led the gains, closing up 0.53%, followed by the S&P and Nasdaq which ended the day up 0.28% and 0.40% respectively. US treasury yields remained largely unchanged, with the 2-year yield decreasing by 1 basis point to 4.451% and the benchmark 10-year yield increasing by 4 basis points to 4.222%. Oil prices saw declines due to concerns over demand, with Brent losing 0.2% to settle at $84.85 a barrel and WTI dropping 0.4% to $81.91 a barrel. Gold initially surged close to record highs after Powell’s remarks but closed the day with a modest gain of 0.4% at $2,421 per ounce.
Dollar in Tug of War in the Week Ahead
The dollar experienced significant volatility yesterday, initially dropping sharply after Powell’s slightly dovish comments before stabilizing as the ‘Trump Trade’ bolstered the greenback. Following the weekend’s assassination attempt on Donald Trump, the likelihood of him securing another presidential term has increased, with market pricing now indicating a 67% probability of his victory in November. This dynamic has left the dollar caught in a tug of war, as the ‘Trump Trade’ tends to strengthen the currency while recent economic data and a more dovish Fed stance weigh it down. Analysts anticipate continued volatility in the coming days and weeks as new developments unfold on both fronts.
Another Busy Day Ahead for Traders
Traders are bracing for another eventful day in global financial markets as they digest recent geopolitical developments, Powell’s statements, and upcoming data releases. Asian markets have a quiet economic calendar, but the return of Japanese traders may reignite discussions on intervention following recent movements in the Yen. European markets expect increased volatility once the US session begins. Early in the New York trading day, focus will be on Canadian CPI figures and US Retail Sales data, both expected to significantly impact their respective markets. Coupled with ongoing geopolitical news, market participants anticipate notable market movements later in the day.
