US Stocks and Yields Rally Ahead of Fed – Nasdaq up 0.8%
US Stocks rallied on Monday with the usual tech names leading the way despite yields also pushing higher in anticipation of a more hawkish Fed. The Dow rose 0.2%, the S&P gained 0.63% and as usual in the current environment, the Nasdaq led the way closing up 0.82% on the day. The dollar pushed higher against most of the majors as US treasury yields took another step up to hit 3-week highs, the 2-year back up to 4.751% and the benchmark 10-year rising another 5 basis points to 4.348%. Oil prices jumped on updates that exports were down in Saudi Arabi for a second month running, Brent rising 1.8% to $86.89 per barrel and WTI up 2.1% to $82.72 per barrel. Gold remained in recent ranges, rising 0.2% back to $2,164 per ounce despite the higher dollar elsewhere.
APAC Central Banks in Focus
This week’s big risk events kick off today in the Asian trading session with both the Reserve Bank of Australia and the Bank of Japan set to announce rate decisions. The RBA is widely expected to keep rates on hold at 4.35% today and the focus for investors will be on the message that the markets receive from Governor Michelle Bullock on whether we will see rates come down in the coming months. Likely to see much more interest in the market is the BOJ which could end 8 years of negative interest rates today, marking Japan’s first-rate hike in 17 years. Traders are expecting to see plenty of volatility across Japanese markets around the event and Yen traders are bracing for a very busy afternoon.
The Trading Calendar Kicks Off the Week Today
The event calendar kicks off in earnest today with rate calls from both the Bank of Japan and the Reserve Bank of Australia in the Asian session and tier 1 data releases scheduled later in the day. The Reserve Bank of Australia is scheduled to deliver its call and associated statements etc at 2.30 pm Sydney time, however as usual there is no set time for the Bank of Japan’s announcement – and there is even the possibility that both key updates could come out around the same time. The London session should see smoother trading conditions with little due out, but investor focus will be north of the border on the New York open with the release of key Canadian CPI data. The expectation is for a 0.6% month-on-month increase for the headline number and for the Median year-on-year to remain at 3.3%. US Building Permits and Housing Start data is also due out but expect the Canadian inflation number to dominate newswires at the time.
