Sunday, January 16

Stocks Hold Firm, US Futures Rise Before Powell – Markets Close Out


US stock index futures advanced and European stocks held steady ahead of Friday’s key Federal Reserve meeting that may offer clues on the timeline for the stimulus reduction.

The Stoxx Europe 600 Index was little changed and stayed on track for the seventh consecutive month of gains, which would be the longest streak in eight years. MSCI Inc.’s Asia-Pacific gauge made a gain, with stocks rising in China, where the central bank supported sentiment after signaling specific measures to dampen the economy.

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Treasury yields fell and the dollar fell as traders awaited Fed Chairman Jerome Powell’s speech at the Jackson Hole symposium, with data on personal consumption and spending before that also on the radar. . A flood of Treasury options expiring on Friday increases the possibility of volatility after Powell’s remarks. Some Fed officials said overnight that the time was near to start tapering off stimulus, weighing on the S&P 500, which fell from a record low.

Advisers to President Joe Biden are considering backing Powell for a second term, people familiar with the matter said, a step that could reinforce expectations for continued accommodative monetary policy.

Recovery from the pandemic and still high inflation support calls for a normalization of monetary policy. But the recent spread of the delta virus strain has complicated the economic reopening. Markets look forward to seeing how Powell balances these competing factors in his comments.

While investor sentiment prior to Jackson Hole “arguably points to a Fed lean accommodative enough to keep markets afloat, poor trading in US bond markets this week suggests a weakening. latent caution and a sideways bias in search of more clarity, “Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, wrote in a note.

Among Fed officials, Dallas President Robert Kaplan said he favors starting the reduction in October or shortly thereafter. James Bullard of St. Louis asked for a start in the fall. Esther George of the Kansas City Fed urged it to start this year. None of them vote on politics in 2021.

West Texas Intermediate crude is headed for its best week since October. Gold topped $ 1,800 an ounce. Bitcoin stabilized around $ 47,000.

Here are some events to watch this week:

  • Fed officials participate in the Jackson Hole Economic Policy Symposium on Friday.
  • July Personal Income and Expenses in the US Friday. Investors will look at the price index for personal consumption expenditures, an inflation measure that the Fed follows closely.

Some of the main movements in the markets:

Stocks

  • The Stoxx Europe 600 was little changed at 8:20 am London time.
  • S&P 500 futures rose 0.3%
  • Nasdaq 100 futures rose 0.3%
  • Dow Jones Industrial Average futures rose 0.3%
  • The MSCI Asia Pacific Index was little changed
  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was up 0.1% to $ 1.1765.
  • The Japanese yen changed little to 110.00 per dollar
  • The offshore yuan changed little to 6.4809 per dollar.
  • The British pound changed little to $ 1.3709

Captivity

  • The 10-year Treasury yield fell one basis point to 1.34%.
  • Germany’s 10-year yield changed little to -0.42%
  • Britain’s 10-year yield changed little at 0.60%.

Raw Materials

  • Brent crude rose 1.7% to $ 72.25 a barrel
  • Spot gold rose 0.6% to $ 1,803.82 an ounce

© 2021 Bloomberg


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