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Fed Upgrades Forecast on Labor, Inflation Improvements; Stocks Rally
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Early this morning it was revealed that the first developed-market central bank had its members dissent about keeping rates close to zero. The minutes of the Bank of England's meeting from two weeks ago showed two members of its Monetary Policy Committee - Weale and McCafferty - dissented in favor of a 25bps rate hike. UK Gilts and the sterling reacted accordingly, the former selling off with a bias towards shorter durations, and the latter strengthening versus the major G-10 currencies. It was interesting to note, however, after the release of the minutes, that the sterling was actually weaker versus the dollar.

US stocks traded listlessly for most of the day in anticipation of the afternoon release of the minutes from the latest FOMC meeting. The S&P 500 (SPX) briefly made a new all-time high during the session, but ended up finishing about a point below the recent all-time closing high of 1987.98. All 10 of its sectors finished positive with industrials leading for a second straight day. High yield bonds continued to perform very strongly, giving equities another tailwind.

The minutes of the FOMC meeting from three weeks ago revealed an increasing bias towards removing policy accommodation at a faster rate due to increased improvement in the labor market and inflation moving up towards the Fed's 2% goal. This had caused the Fed to upgrade its assessment on inflation. Although many participants viewed the recent labor market gains as a reason to begin hiking rates at an earlier date, several still saw inflation moving back only slowly towards it goals. Presumably the "several" is the dovish, voting members of the committee, who have been in relative control of policy in recent years.

Short-term and intermediate Treasuries sold off following the release of the minutes and the USD rallied substantially. The 5-year Treasury yield was six basis points higher to 1.63% and the USD gained 0.45%. US stock indices were generally stronger. The focus for the market now turns to speeches from Janet Yellen, Mario Draghi, and Ben Broadbent on Friday at the Jackson Hole Fed symposium.

Tomorrow's Financial Outlook

Tomorrow morning two economic reports are scheduled in the US: weekly jobless claims and existing home sales from July. Related housing data reported earlier this week was very strong and its expected to be at roughly the same pace in existing home contracts. The four-week average of jobless claims fell to the lowest level of 2006 in the week prior, and its expected to remain near that level this week.

Overnight a big piece of data is due out, the preliminary August reading of China's manufacturing PMI. The index has risen for the six consecutive months and in order to keep up the torrid pace of equity gains, it will need to continue to increase. Of worry is the substantial drop in credit activity in July, which will likely cause raw materials-related contracts to be reduced. The index is expected to decline to 51.5 from 51.7 in July. Similar reports are due out from Europe in addition to UK retail sales.

Only four companies are scheduled to report earnings tomorrow and they are retailers. These are from Gap (GPS), Ross Stores (ROST), Dollar Tree (DLTR), and Aeropostale (ARO).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Fed Upgrades Forecast on Labor, Inflation Improvements; Stocks Rally
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Early this morning it was revealed that the first developed-market central bank had its members dissent about keeping rates close to zero. The minutes of the Bank of England's meeting from two weeks ago showed two members of its Monetary Policy Committee - Weale and McCafferty - dissented in favor of a 25bps rate hike. UK Gilts and the sterling reacted accordingly, the former selling off with a bias towards shorter durations, and the latter strengthening versus the major G-10 currencies. It was interesting to note, however, after the release of the minutes, that the sterling was actually weaker versus the dollar.

US stocks traded listlessly for most of the day in anticipation of the afternoon release of the minutes from the latest FOMC meeting. The S&P 500 (SPX) briefly made a new all-time high during the session, but ended up finishing about a point below the recent all-time closing high of 1987.98. All 10 of its sectors finished positive with industrials leading for a second straight day. High yield bonds continued to perform very strongly, giving equities another tailwind.

The minutes of the FOMC meeting from three weeks ago revealed an increasing bias towards removing policy accommodation at a faster rate due to increased improvement in the labor market and inflation moving up towards the Fed's 2% goal. This had caused the Fed to upgrade its assessment on inflation. Although many participants viewed the recent labor market gains as a reason to begin hiking rates at an earlier date, several still saw inflation moving back only slowly towards it goals. Presumably the "several" is the dovish, voting members of the committee, who have been in relative control of policy in recent years.

Short-term and intermediate Treasuries sold off following the release of the minutes and the USD rallied substantially. The 5-year Treasury yield was six basis points higher to 1.63% and the USD gained 0.45%. US stock indices were generally stronger. The focus for the market now turns to speeches from Janet Yellen, Mario Draghi, and Ben Broadbent on Friday at the Jackson Hole Fed symposium.

Tomorrow's Financial Outlook

Tomorrow morning two economic reports are scheduled in the US: weekly jobless claims and existing home sales from July. Related housing data reported earlier this week was very strong and its expected to be at roughly the same pace in existing home contracts. The four-week average of jobless claims fell to the lowest level of 2006 in the week prior, and its expected to remain near that level this week.

Overnight a big piece of data is due out, the preliminary August reading of China's manufacturing PMI. The index has risen for the six consecutive months and in order to keep up the torrid pace of equity gains, it will need to continue to increase. Of worry is the substantial drop in credit activity in July, which will likely cause raw materials-related contracts to be reduced. The index is expected to decline to 51.5 from 51.7 in July. Similar reports are due out from Europe in addition to UK retail sales.

Only four companies are scheduled to report earnings tomorrow and they are retailers. These are from Gap (GPS), Ross Stores (ROST), Dollar Tree (DLTR), and Aeropostale (ARO).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Minyanville Staff
Daily Recap
Fed Upgrades Forecast on Labor, Inflation Improvements; Stocks Rally
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Early this morning it was revealed that the first developed-market central bank had its members dissent about keeping rates close to zero. The minutes of the Bank of England's meeting from two weeks ago showed two members of its Monetary Policy Committee - Weale and McCafferty - dissented in favor of a 25bps rate hike. UK Gilts and the sterling reacted accordingly, the former selling off with a bias towards shorter durations, and the latter strengthening versus the major G-10 currencies. It was interesting to note, however, after the release of the minutes, that the sterling was actually weaker versus the dollar.

US stocks traded listlessly for most of the day in anticipation of the afternoon release of the minutes from the latest FOMC meeting. The S&P 500 (SPX) briefly made a new all-time high during the session, but ended up finishing about a point below the recent all-time closing high of 1987.98. All 10 of its sectors finished positive with industrials leading for a second straight day. High yield bonds continued to perform very strongly, giving equities another tailwind.

The minutes of the FOMC meeting from three weeks ago revealed an increasing bias towards removing policy accommodation at a faster rate due to increased improvement in the labor market and inflation moving up towards the Fed's 2% goal. This had caused the Fed to upgrade its assessment on inflation. Although many participants viewed the recent labor market gains as a reason to begin hiking rates at an earlier date, several still saw inflation moving back only slowly towards it goals. Presumably the "several" is the dovish, voting members of the committee, who have been in relative control of policy in recent years.

Short-term and intermediate Treasuries sold off following the release of the minutes and the USD rallied substantially. The 5-year Treasury yield was six basis points higher to 1.63% and the USD gained 0.45%. US stock indices were generally stronger. The focus for the market now turns to speeches from Janet Yellen, Mario Draghi, and Ben Broadbent on Friday at the Jackson Hole Fed symposium.

Tomorrow's Financial Outlook

Tomorrow morning two economic reports are scheduled in the US: weekly jobless claims and existing home sales from July. Related housing data reported earlier this week was very strong and its expected to be at roughly the same pace in existing home contracts. The four-week average of jobless claims fell to the lowest level of 2006 in the week prior, and its expected to remain near that level this week.

Overnight a big piece of data is due out, the preliminary August reading of China's manufacturing PMI. The index has risen for the six consecutive months and in order to keep up the torrid pace of equity gains, it will need to continue to increase. Of worry is the substantial drop in credit activity in July, which will likely cause raw materials-related contracts to be reduced. The index is expected to decline to 51.5 from 51.7 in July. Similar reports are due out from Europe in addition to UK retail sales.

Only four companies are scheduled to report earnings tomorrow and they are retailers. These are from Gap (GPS), Ross Stores (ROST), Dollar Tree (DLTR), and Aeropostale (ARO).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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