mollyfamwatYesterday in the U.S., there was a release of inflation data for August, and the news is expected to be even better than expected. The annual rate of inflation tumbled from 2.6% in July to 2.0% in August, a tad better than analysts’ forecasts of a 2.2% reading. That is good news for the U.S. economy, and it is likely to be reflected in equities and bonds, on the belief that the Fed will be able to keep inflation under control. Will it be enough to keep markets in a sustainable bull market? Maybe not.
The federal funds futures contract that is used by traders to hedge and speculate on the direction of the US Dollar (or other currencies) in the US financial market is trading in a narrow range ahead of the release of the latest inflation data. Last week the futures contract is quoted at the settlement price of $1.0306, implying that the price of the contract was $1.030675 per US Dollar. The one-month dollar-dollar spot rate is $1.0307, implying that the spot rate is $0.0105 per US Dollar. These quotes suggest that the market expects the US inflation rate to be 2.3% in March; the consensus is for a 2.2% annualized rate. The historical average
U.S. stock futures surged, suggesting that the indexes would be near all-time highs as investors awaited inflation and results from the country’s largest banks.
Futures linked to the S&P 500 fell 0.1%, a day after the broad index hit its 39th closing. record level this year. Futures for the Dow Jones also fell 0.1 percent Tuesday, while futures for the Nasdaq-100 were unchanged.
Major U.S. stock indexes have risen in recent sessions, supported by strong quarterly expectations for corporate earnings and signs of a continued economic recovery. Investors have also become more confident that inflation is a temporary phenomenon and that the Federal Reserve will maintain its stimulative monetary policy for the time being.
It is a kind of Zlatoust, not too hot, not too cold, the commissioner said.
David Donabedian,
Chief Investment Officer, CIBC Private Wealth, USA.
Overseas, the Stoxx Europe 600 index fell 0.1 percent, after hitting a record high on Monday.
Among the individual actions,
Nokia
rose more than 6% after the mobile phone maker announced it was raising its forecast for 2021.
Swatch Group
rose more than 2 percent after the company announced Monday night that it had posted a profit for the first half of the year.
British banks rose after the country’s financial regulator announced it would lift restrictions on how banks can pay dividends to shareholders.
HSBC,
Lloyds and Natwest are up 1% to 2%.
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In Asia, the indexes rose. In Japan, the Nikkei 225 Index rose 0.5% and in Hong Kong, the Hang Seng Index rose 1.6%. In mainland China, the Shanghai Composite Index rose 0.5%.
Consumer price data will be released at 8:30 a.m. ET, are examined to determine whether inflation is spreading to broader sectors of the economy or is limited to sectors with pandemic supply problems.
The yield season begins with data from
JPMorgan Chase
и
Goldman Sachs.
The group must be announced before the opening bell. Expectations are high, especially for the big banks, which should benefit from the economic recovery. Investors say they are most interested in what CEOs say about whether the rest of the year will go well.
PepsiCo,
Brands of Conagra
и
First Republic Bank
will also issue quarterly reports before the opening of the stock exchange.
The yield on the benchmark 10-year Treasury note rose to 1.365% from 1.362% on Tuesday. Yields and bond prices move in opposite directions.
Yields have fallen in recent months as investors have moved out of equities and into the bond market because of concerns about the Covid 19 Delta option, said Hugh Gimber, strategist at J.P. Morgan Asset Management. He added that this has contributed to a rebound in fast-growing sectors of the stock market, such as technology, in recent weeks.
In recent weeks, we have seen refinancing transactions collapse, Gimber said. The stock market is currently inspired by the bond market.
In commodity markets, Brent crude, the international benchmark, rose 0.6% to $75.63 a barrel. The gold price rose by 0.2%.
The major US equity indices have risen in recent sessions.
Photo:
Richard Drew/Associated Press
Email Will Horner at [email protected].
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