US Stocks Rally into the Weekend – Dow up 0.8%
All three of the major US indices rallied into the weekend despite a surprise downgrade for the US from ratings agency Moody’s. The Dow led the way higher, closing up 0.78%, followed by the S&P, which added 0.70%, and the Nasdaq, up 0.52% by the close. The dollar also drove higher again against the majors, the DXY up 0.32% to 101.09. Treasury yields initially dipped after the announcement but then pulled back to finish the day higher, the 2-year up 3.9 basis points to 3.999% and the 10-year up 4.5 basis points to 4.477%. Oil prices settled higher to lock in a second week of gains, although still remaining at the lower end of the range, Brent up 1.36% to $65.41 and WTI up 1.41% to $62.49. Gold prices pulled back again, down 1.12% to close out the session and the week at $3,202.29 an ounce.
US Data Largely Off the Cards for the Week Ahead
It is a week largely bereft of US data releases to come, and some investors will see this as an opportunity to step back and assess all the recent updates with regard to the world’s biggest economy. There’s very little written about the US economy at the moment that does not include the dreaded ‘T’ word, and more tariff updates are likely to come this week. As we kick off this week, the trade side of the US economy equation is certainly looking better than it has in previous weeks, with deals set to be made with China, Europe, and Japan, to name a few, and one looking settled with the UK. However, data does seem to be on the turn, and investors will now be looking at how that balances out, which could see further volatility across all financial products in the days ahead.
Quiet Calendar Day to Start the Week
It is a quiet calendar day to kick off the trading week, although markets are expected to start on the back foot after the surprise downgrade of the US from Moody’s on Friday. The biggest potential data mover of the day comes early in the piece with a big data dump out of China midway through the Asian session. The highlights of the release will be Industrial Production data (exp. 5.7% y/y) and Retail Sales (exp. 6.0% y/y), with investors likely to be watching these numbers very closely as a measure of tariff impact on the Chinese economy. The latter two sessions are quiet in terms of data releases; however, we do hear from several central bankers, including Swiss National Bank Chairman Martin Schlegel, as well as Fed members Bostic, Williams, Jefferson, and Logan.
