A look at the day ahead from Julien Ponthus.
A consensual takeaway from Federal Reserve Chairman Jerome Powell’s remarks at the Jackson Hole Symposium is that investors will be able to dirty dance to the beat of the Fed’s $120 billion monthly asset purchases for just a little bit longer.
Powell stuck to his dovish monetary policy message without disclosing the timing of the central bank’s tapering strategy, allowing the S&P 500 and the Nasdaq to close at record highs on Friday.
Like all things, the current bull market must come to an end some day. But investors who feared that moment could have been last Friday can sigh in relief even if September is typically the trickiest month of the year for Wall Street.
There seems to have been no second thoughts or buyer’s remorse over the weekend with Asian bourses on the rise this morning and the dollar index falling to a two-week low.
Wall Street futures are ticking up and European bourses are set to open slightly in positive territory. Britain is closed for a bank holiday.
There’s still plenty of fears around that the rally is running out of steam and that resurgent inflation might force reluctant policy makers to pull the plug on quantitative easing in a disorderly way.
In the meantime though, the yield on benchmark 10-year U.S. Treasury note is at 1.3%, down from last week’s two-week high of 1.375%.
In the euro zone, where the economy is bouncing back amid trillions of euros worth of monetary and fiscal stimulus, labour shortages and production bottlenecks, German 10-year bonds yield -0.42% .
Oil prices pared early gains on Monday, off more than three-week highs reached earlier in the session as a powerful hurricane ploughing through the Gulf of Mexico forced shutdowns and evacuations of hundreds of offshore oil platforms.
Gold is steady, with the spot price at $1,816.2 per ounce, down 0.1%, having touched its highest in three weeks earlier in the session.
Key developments that should provide more direction to markets on Monday:
-Japan’s retail sales extend gains but COVID-19 challenges persist
-Thai July factory output slows from virus curbs, outbreaks
-Eurozone business sentiment indexes consumer inflation expectations
-Preliminary German CPI/HICP
-Emerging markets: Colombia central bank
-U.S. pending new home sales data
-U.S. 6-month and 3 mth bill auctions
(Reporting by Julien Ponthus; editing by Dhara Ranasinghe)
