Tech Stocks Hit Fresh Record Levels – Nasdaq up 0.2%
US tech stocks pushed both the S&P and Nasdaq to more fresh all-time levels overnight as good Alphabet earnings and positive trade news lifted investor confidence. The Dow did take a hit, losing 0.70% on the day, but the S&P added 0.07%, and the Nasdaq gained 0.18% to again notch up record levels. Treasury yields pushed higher, the 2-year gaining 3.7 basis points to move back up to 3.917%, and the 10-year added 1.6 basis points to 4.396%. The dollar pushed higher, the DXY up 0.3% to 97.51, with the Euro dropping lower on the day after the ECB held rates as expected. Oil prices jumped on the back of news that Russia may cut exports, although the move was pared on updates that Chevron may renew production in Venezuela, Brent closing up 1.23% at $69.35 and WTI up 1.44% at $66.19. Gold prices pulled back again as haven flows continued to recede, down 0.55% to $3,368.15 by the close.
Fed Remains in Focus for More Than One Reason
The Federal Reserve Bank is set to announce its latest interest rate announcement next week, and in normal market conditions, this meeting would pass relatively smoothly, with a hold nearly 100% priced in across the market. However, political pressure on Fed Chair Jerome Powell could make this meeting a little bit more interesting than normal. President Trump visited the Fed building yesterday, and the TV coverage made painful viewing for all concerned, as he was obviously there to undermine the Fed Chair, as his administration has been doing for a number of months now. There are serious question marks on whether Jerome Powell will last the distance in the current circumstances. However, the data doesn’t lie, and at the moment it does not justify a Fed cut this month, and if jobs numbers are strong again next week, we may even see those September cut hopes (currently 60% priced in) pushed out as well. Expect more fun and games at the Fed in the coming days!
Quieter Calendar Day to End the Week
It is a quieter macroeconomic calendar day to end the trading week today, although there are good data drops due across all three trading sessions, and we are expecting more geopolitical updates as the day progresses. We have already seen key Tokyo CPI data print slightly lower than expected (2.9% y/y vs. expected 3.0% y/y), but the reaction has so far been relatively muted. The London session sees key Retail Sales numbers out of the UK (exp +1.2% m/m), before focus jumps across the channel to Germany for the IFO Business Climate data (exp 89.1). There is more US data in the New York session with the Durable Goods (exp -10.4% m/m) and the Core Durable Goods (exp +0.1% m/m) due out early in the session. However, traders are again expecting geopolitical updates to dominate flow into the weekend.
