Stocks Higher Again on Cooling Data
It has been a good start to the week and investors will be hoping that the good times continue to roll as we approach the two main data releases over the next couple of days. US markets again stepped higher yesterday as data once more pointed to a cooling economy and a greater chance that the Fed has reached a peak in terms of interest rate hikes. The Nasdaq had the stronger run, closing up 0.54% followed by the S&P, up 0.38% and the Dow which added just 0.1% on the day. US treasury yields slipped further to near a 3-week low, the benchmark 10-year down to 4.12% and the dollar again dropped against most of the majors and commodities with Gold again pushing higher to peak just below the key $1,950 level.
Major Risk Events Ahead for the Fed
Investors have been happy with data prints out of the US so far this week as jobs numbers have shown that there is a cooling in the labour market and GDP printed below expectation. The encouraging aspect of these results is that they have indicated that the economy is taking a step down and not going into free fall. As usual, though, there is a big caveat on all this and this week it’s because we have still to see the two major US data releases which come in the form of the Fed’s preferred inflation measure tonight and the non-farm payrolls on Friday. A strong result in either of these prints could see the work of the last few days undone swiftly and as usual, traders will be preparing for the worst whilst hoping for the best.
Another Big Day Ahead for Investors
Traders are bracing for more volatility ahead as we hit the big data end of the week. Data has been encouraging risk with some good results this week and investors are hoping for more of the same today. Already in the Asian session, we have seen a better-than-expected Manufacturing PMI number out of China which should bring some relief to the beleaguered economy and we have more key data ahead. In the European session, we have a raft of CPI numbers from across the continent but the big focus for investors is once again on the US session. The usual weekly unemployment claims numbers are due out in the US but the real action will come around the release of the FOMC’s favoured inflation indicator the Core PCE Price Index. Expectation is for a 0.2% increase but anything significantly away from that number will see some sharp moves in the market.
