Monday market minute
- Global stocks hit new all-time highs, while bond markets remain content with faster inflation signals as investors expect this week’s Fed meeting to take the direction of the summer.
- Bond futures suggest the largest long positions in nearly four years before Wednesday’s statement, indicating a lack of concern over short-term tuning talks from Fed Chairman Powell and his colleagues at the FOMC.
- Yields on the 10-year benchmark notes remain at 1.46% amid the biggest weekly decline in Treasuries in more than a year, while the dollar index falls to 90.481.
- Bitcoin approaches the $ 40,000 mark as Tesla CEO Elon Musk says it could resume accepting the cryptocurrency as payment if miners improve their clean energy mix.
- CDC data shows that 143.9 million Americans have been fully vaccinated against the coronavirus, with about 309.3 million doses administered as of Sunday.
- US equity futures suggest a modestly higher open on Wall Street as investors look at the Fed’s rate decision on Wednesday.
US stock futures edged higher on Monday, while Treasury yields held near multi-month lows as investors hit near-record highs ahead of this week’s Federal Reserve meeting that it could set the tone for summer stock performance.
The Fed begins its two-day rate-setting meeting tomorrow, with a formal decision scheduled for 2:00 p.m. ET Wednesday, amid a backdrop of the fastest rise in consumer prices in more than one year. decade and lingering questions about the nature – and staying power: of inflation as the economy nears its full exit from the coronavirus pandemic.
Any hint from President Jerome Powell and his colleagues that inflationary pressures may trigger discussions about slowing the pace of the Fed’s monthly purchase of $ 120 billion bonds, the first step toward normalizing historically low interest rates, It will undoubtedly shake the markets, but a reiteration of the opinion The fact that inflationary pressures are “transitory” and likely to diminish during the second half of the year will likely add to the bullish tint of the market.
Bond investors aren’t betting on any ‘taper talk’, at least right now, and futures show the biggest net long positions in more than two and a half years. Meanwhile, the count of investors betting against the dollar remains near three-month highs at $ 17.66 billion, according to CFTC data released Friday.
And with the second-quarter earnings season approaching, investors are expecting a 63.1% rise in collective earnings from the S&P 500 to $ 374.7 billion weighted by stocks, with industrial and consumer discretionary stocks leading the post-rally. the pandemic.
That gives stocks another boost this week, with futures contracts pegged to the Dow Jones Industrial Average indicating an opening bell gain of 25 points and those pegged to the S&P 500, which closed at a record 4,247.44 points last month. Friday, priced at 4 points. upward.
Nasdaq Composite futures, meanwhile, added 30 points as yields on benchmark 10-year Treasuries fell to 1.46% and Tesla. (TSLA) – Get report It traded 0.6% higher in the previous market after founder and CEO Elon Musk said the group sold about 10% of its $ 1.5 billion in bitcoin holdings.
Musk’s presentation also included a commitment to resume acceptance of cryptocurrency as payment for his company’s clean energy cars “when there is a confirmation of reasonable clean energy use (~ 50%) by miners with a positive future trend, “which pushed Bitcoin north of $ 39,000 early Monday. Commerce.
In Europe, stocks hit a record both on the prospect of a dovish Fed decision on Wednesday and last week’s ‘stay the course’ message from the European Central Bank, which is pledging to keep its bond purchases and record low rates until at least the end of the year.
Oil prices added to recent gains, extending WTI crude’s three-week rally to $ 71 a barrel as traders expected stronger demand in the second half in key energy markets.
Brent crude contracts for August delivery, the global benchmark, added 68 cents since Friday’s close in New York to trade at $ 73.37 a barrel, while WTI crude rose 56 cents to $ 71.47 a barrel.
Overnight in Asia, Japan’s Nikkei 225 closed 0.74% higher in quiet trading as markets in the region, including China, were closed for the traditional Dragon Boat Festival.
However, the gains, coupled with today’s movements in Europe, lifted the MSCI Word index to a new high of 716.61 points.