Stocks Close Higher After fed Comments
US stock markets closed the day higher on Friday as much-awaited comments from Fed Chair Jerome Powell encouraged investors with their balanced message. The Dow rose 0.73%, the S&P 0.67% and the Nasdaq gained 0.94% on the day. Bond markets interpreted the comments from a more hawkish standpoint and treasury yields rose in the US, the 10-year relatively steady at 4.23% and the more shorter-term rate-sensitive 2-year rising to 5.07%. Currencies experienced another whippy day with the dollar initially gaining before closing out the day relatively unchanged, although traders note that the USDJPY once again hit fresh highs.
Consistent Central Bank Messages from Jackson Hole
The much-anticipated central bank gathering at Jackson Hole has now come and gone and investors have received fairly consistent messages from the central bankers speaking there. The headline act, Jerome Powell confirmed that the Fed will continue to battle high inflation whilst then throwing his other leg over the fence to advise that it will be agile in its policy-making and proceed carefully with regard to monetary policy. ECB President Christine LaGarde also promised to set rates as high as needed to cap inflation and BOJ Governor Kazuo Ueda indicated that the BOJ will keep rates low as it deals with inflation from a completely different perspective. Overall, most investors took the message that data will dictate short-term moves and will be putting even more importance on key inflation numbers in the next few months.
A Quiet Start to a Busy Week
The event calendar is relatively quiet today ahead of what is a very busy week in terms of economic data releases. The Asian market will initially open with investors analyzing the messages that we have received from Jackson Hole over the weekend and then the focus will move to Australia for the release of the latest Retail Sales data. There is very little on the event calendar for the rest of the day in both the London and New York sessions and with UK markets enjoying the end of the Summer Bank Holiday, traders are expecting relatively quiet trading conditions ahead of a much heavier date calendar as we move through the week.
