US retail sales were weaker than expected, but it was Wallers comments from the Federal Reserve that surprised markets the most. Waller said recent data shows the Fed hasn’t made much progress on that economic inflation
economic inflation
Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or a country increases over a period of time. It is the rise in the general price level where you actually buy a particular currency less than it was in previous periods. In terms of evaluating strength or currencies, and therefore foreign currencies, inflation or its measures are very influential. Inflation stems from the general creation of money. This money m
Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or a country increases over a period of time. It is the rise in the general price level where you actually buy a particular currency less than it was in previous periods. In terms of evaluating strength or currencies, and therefore foreign currencies, inflation or its measures are very influential. Inflation stems from the general creation of money. This money m
Read this termMore highs followed. That was a hike…not another hike. So even though the market has been tolerating the playbook Fed
Fed
“Federal Reserve” is an acronym that stands for the Federal Reserve or the Federal Reserve System, which is the central banking system of the United States. The Fed’s actions, primarily interest rate decisions, are often discussed by traders, as they greatly affect all financial markets. The Federal Reserve should not be confused with or replaced with the term “Feds” and doing so tells everyone that you are a total noob. The term “federals” refers to US federal law enforcement agencies, including agencies such as the FBI (Federal Office of
“Federal Reserve” is an acronym that stands for the Federal Reserve or the Federal Reserve System, which is the central banking system of the United States. The Fed’s actions, primarily interest rate decisions, are often discussed by traders, as they greatly affect all financial markets. The Federal Reserve should not be confused with or replaced with the term “Feds” and doing so tells everyone that you are a total noob. The term “federals” refers to US federal law enforcement agencies, including agencies such as the FBI (Federal Office of
Read this term They had to hike again, they weren’t thinking there would be several hikes left from the Fed.
Say it is not.
Now that the President is more hawkish and may have been sent to take one for Chairman Powell, the S&P is slowing down heading to 4200. I’m not sure the Fed wants to see stocks race too much forward as they try to ease the economic ship in for a soft landing. After all, if the economy falls off a cliff as some predict, the implications for stocks could get uglier from the highs. Moreover, the debt market is also at odds with the Feds thinking with the two-year yield trading above and below 4% today when the Fed is targeting 5.25% or more (according to Waller) and determined not to look for easing until 2024 at the earliest. . The disconnect is evident in the January fed funds contract as well which is priced in the fed funds rate of 4.47% (it was at 4.36% earlier in the day). Once again, the Fed is looking for a lower end of the Fed’s target range of 5.0%-5.25%.
Waller at least slowed stocks and bonds down a bit.
Later university. From Michigan Consumer Sentiment (Preliminary), and although sentiment remained elevated at 63.5 vs. 62.0 last month, it was the inflation reading that caught most markets’ attention. This measure saw one-year inflation expectations rise sharply to 4.6% from 3.6%.
So, in addition to Waller, the consumer is not buying the “happy days ahead” of inflation. Having said that, this week’s CPI and PPI data have been encouraging, and accounts for the next few months at least suggest that with a little luck – and some co-operation from shelter costs – a large portion of the CPI headline at 5%, from inflation readings Main and basic (see post here). The not so great part of this idea is that gas and oil prices are rising again and that could raise costs in many sectors of the economy (not just at the gas pump).
Implications of today’s news In the currency market, the US dollar was the king and ending the day as the strongest of the major currencies (see ranking below). The New Zealand dollar was the weakest followed by the Australian dollar as risk aversion sent those currencies lower against most currencies (the dollar was up 1% against both currencies).
From the strongest to the weakest among the major currencies
Although the dollar rose against all major currencies today, it ends the trading week mixed against the majors. The US dollar was weaker against the following currencies
- Euro, -0.86%
- CHF, -1.26%
- Canadian dollar -1.17%
- Australian dollar, -0.71%
The US dollar was stronger or unchanged against the following:
- Japanese yen, +1.21%
- GBP, unchanged
- NZ + 0.68%
US stocks ended the day lower despite a good start to the earnings season from some banks. JPMorgan shares rose 7.55%, CItibank rose 4.78% and PNC rose 0.36%, but Wells Fargo fell -0.05% after largely better-than-expected earnings.
As for the major indices, although they closed at the lowest levels, they still ended the day lower:.
- The Dow Jones fell -0.42%.
- S&P fell -0.21%
- Nasdaq fell -0.35%
For the trading week, all three indices closed with gains:
- The Dow Industrial Average rose 1.20%.
- The S&P rose 0.79%
- The slowing Nasdaq Cannes rose with a modest gain of 0.29%.
In the US in this market, yields reacted to the upside on data/news with the two-year yield back above the 4% level at 4.103%. Here’s a snapshot of the levels at the end of the week:
- The two-year yield was 4.103%, up 13.1 basis points
- The 5-year yield is 3.61%, up 10.5 basis points
- The 10-year yield was 3.517%, up 6.8 basis points
- 30-year yield of 3.738% + 4.9 basis points
For the trading week:
- The two-year yield rose 11 basis points
- The 5-year yield rose 9.3 basis points
- The 10-year yield rose 10.4 basis points
- The 30-year yield rose 11.5 basis points
The price of gold/silver fell sharply today in response to higher yields and a stronger dollar:
- Spot gold fell $36.84, or -1.81%, to $2003.43. During the trading week, gold prices fell by -3.62 USD, or -0.18%.
- Spot silver fell -$0.50, or -1.94%, to $25.31. For the trading week, the price is still up $0.36, or 1.43%.
- Crude oil rose $0.36 to $82.52 today. The highest price for the week was $83.53. This is exactly where the 200 day moving average is currently. The 200 day moving average next week will be a key barometer for both buyers and sellers – a move above is more bullish. Staying below is more bearish. The lowest price for the week was $79.37 this week. Overall, Crude Oil ends the week higher at $1.82, or 2.26%.
Next week, CPI data will be released from Canada, Japan, New Zealand and the United Kingdom. RBA meeting minutes will be released (rates kept unchanged). The ECB will also release the minutes of the meeting (raised by 50 basis points to 3.5%).
In the US, manufacturing indices released by Philly Fed and Empire will be released along with existing home sales and manufacturing/services PMI data.
On the earnings calendar, the big names still have a week or two away from a release. More financial institutions will dominate the calendar next week:
Monday 17th April
Tuesday 18th April
- Goldman Sachs
- BNY Mellon
- American bank
Wednesday 19th April
- Morgan Stanley
- Bancorp
- Zions Bancorporation
- Citizens
Thursday 20th April
- Huntington
- Comerica
- KeyBank
- the truth
Starting the week of April 24th, profit is in full swing (subject to change) Here’s a preview of what’s to come. Traders will watch expectations going forward. If earnings estimates start to fall, the S&P and major indices could be in trouble:
Monday 24th April
Tuesday 25th April
- the alphabet
- PepsiCo
- Verizon
- UPS
- Raytheon
- Lockheed Martin
- GE
- 3M
- GM
- Chipotle
- daw
- pop
- whirlpool
Wednesday 26th April
- Meta platforms
- visa
- AT&T
- Qualcomm
- Boeing
- service now
- general dynamics
- Hilton Worldwide
Thursday 27th April
- apple
- Microsoft
- Amazon
- merck
- Bristol-Myers Squibb
- Intel
- Larva
thanks for your support. Have a wonderful and safe weekend everyone.