Markets Mixed Ahead of the Weekend
US stock markets experienced a mixed trading day yesterday as investor concern over a possible government default crept higher. The Dow finished the day 0.7% in the red, the S&P down 0.2%, however, the Nasdaq closed up 0.2%. Earlier in the day the Bank of England raised rates 25bps as expected and US data dropped slightly as the monthly PPI came out lower than expected and weekly Unemployment Claims jumped by 20k more than had been anticipated. The Dollar appreciated against most of the majors and US yields fell as haven flows dominated.
Data Pushing Towards a Fed Pause
Another week and another set of data for investors to digest and this week’s focus on US data will push the Fed more strongly towards a pause of its aggressive tightening cycle at its next meeting. The major focus of this week for a large chunk of the market was the US CPI data that was delivered on Wednesday and although this came out largely as expected, the year-on-year number was showing a step in the right direction for the Fed. This was backed up yesterday by the PPI data and the weekly unemployment claims. The market is now pricing in a 92% chance of a pause at the next meeting after these updates, but those with hawkish tendencies will note that the data misses haven’t been anywhere near excessive and there are still 33 days until the next meeting and a lot of water will pass under the markets bridge in that time.
3 Big Trading Sessions Ahead
It’s been a long trading week for many already this week with moribund conditions for the first few days followed by largely rangebound moves after data releases, but there are still another three sessions to go, and the market does feel poised for some moves. In the Asian session today, the focus will move to the land of the long white cloud with the quarterly Kiwi Inflation expectations being released. The London session sees the focus return to the UK again with the GDP numbers due out, no change expected for the month-on-month number and a 0.1% increase for the quarterly. The US session sees the latest University of Michigan sentiment and inflation data being released. Good luck today!
