Dow Hits New Record High – Up 0.6% to 41,335
US markets experienced a mixed trading day yesterday as investors digested the latest updates from market powerhouse Nvidia. However, surprisingly strong GDP data helped propel the Dow Jones to new record levels. The Dow closed up 0.59% at a record 41,335, while tech stocks weighed on the S&P 500 and Nasdaq, with the indices closing flat and down 0.23% respectively.
Treasury yields edged higher ahead of tonight’s key inflation number, with the 2-year yield adding 2.9 basis points to reach 3.896%, and the 10-year yield gaining 2.4 basis points, climbing to 3.862%. The dollar strengthened as well, rising 0.36% against a basket of currencies. Oil prices continued to gain ground amid ongoing supply concerns out of Libya, with Brent up 1.64% to $79.94 and WTI up 1.87% to $75.91 a barrel. Gold also saw a rise, closing the day at $2,522 an ounce.
Dollar in Focus Ahead of PCE Data
The dollar regained some ground in trading yesterday as the FX market turned its attention to today’s crucial PCE Price Index data release. This is the first of three key updates ahead of the next Federal Reserve meeting, where the FOMC is expected to begin cutting rates. These data points will heavily influence the extent of the Fed’s easing. The market currently favours a 25-basis point cut, but weaker data in the coming weeks could bring a 50-basis point cut back into consideration. Expectations are for a 0.2% month-on-month increase, and anything below that could see the Fed take more aggressive action, potentially pushing the dollar into lower ranges.
Busy Trading Day Ahead into the Weekend
Today is set to be a busy day for traders, with a packed macroeconomic calendar, particularly focused on inflation data. CPI figures are due from both Tokyo and the Eurozone, with the highlight being the PCE Price Index data, scheduled for release early in the New York session.
Asian markets will be closely watching the Tokyo Core CPI number, which will be released at the start of the Tokyo session, followed by Australian Retail Sales data. The European session will see the release of the key Eurozone CPI Flash Estimate before the New York market opens, with traders then turning their attention to the Core PCE Price Index. Canadian GDP figures are also due early in the day, and US data continues to flow throughout the session, with the Chicago PMI and Revised University of Michigan Consumer Sentiment reports scheduled before the market close.
