Stocks and gold turn higher, yields and dollar lower, on Yellen remarks
- To review, the result of the FOMC’s meeting less than two weeks ago was a notably dovish one, with the central bank cutting its expectation of rate hikes this year to just two from four. However, Fed speakers since then have tried to walk back that sentiment, with two of them even suggesting a rate hike as a possibility as soon as April.
- In her speech today (Q&A still to come) Fed boss Janet Yellen resets things to how they were just after the FOMC meeting, telling an audience caution on rate hikes is “especially warranted” for now, and reminding that the bank has “considerable scope” for further stimulus.
- The S&P 500 (SPY +0.5%) has swung from loss to gain, and gold (GLD +1.4%) has shot to new session highs.
- Meanwhile, the 10-year Treasury yield has fallen six basis points to 1.825%, with TLT +0.7%, and the bid for the dollar (UUP -0.6%) has vanished.
- Any ideas floating around of an April rate hike are likely off the table as Federal Reserve Chair Janet Yellen says caution in further rate hikes is “especially warranted” at the current time. Not only that, but the central bank has “considerable scope” for further stimulus, if needed, she says.
- Dow +0.3%.
- 10-yr +0.46%.
- Euro +0.75% vs. dollar.
- Crude -2.56% to $38.38.
- Gold +1.55% to $1,241.00.
Oil prices sharply lower despite Yellen comments
Oil prices fell 3 percent on Tuesday, reflecting growing concern that a two-month rally was fading as demand fails to keep up with swelling global supply, including new output from Kuwait and Saudi Arabia.
Remarks by Federal Reserve Chair Janet Yellen, which were seen as generally dovish for the interest rate outlook, sparked a brief rebound before prices slumped again.
The decision by Kuwait and Saudi Arabia to resume oil production at the jointly operated 300,000-barrel-per-day Khafji field, at a time when production is supposed to be frozen, triggered the heavy selloff in oil markets, traders said.
Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits.
Snapshot: A relatively quiet week ahead as the first quarter draws to a close. The economic calendar will continue to be on the forefront again this week as investors are likely to focus attention on official China PMI data and US inflation data, while Friday‘s jobs report will also likely be a main focus in the US. Global PMI data due out on Friday will garner attention elsewhere, along with Yellen speaking to the Economic Club of NY on Tuesday. The corporate calendar remains fairly quiet, with a number of analyst meetings scheduled and US autos sales for March due out Friday morning.
- Pre-open: CCL, LULU, PAYX, UNF
- Post-close: LUB, MU, PRGS, TNGO
- US: ADP private employment (Mar)
- Europe: Euro area Economic sentiment (Mar), Germany CPI
- Asia: Japan Industrial production (Feb)
- Pre-open: GBX, LNN, SCHN
- North America: US Initial jobless claims, Chicago PMI (Mar), Canada GDP (Jan)
- Europe: Euro area HICP inflation (Mar-flash), UK GDP (Q4)
- Asia: Japan housing starts (Feb), S. Korea industrial production (Feb)
- Pre-open: BBRY
- US: ISM Manufacturing (Mar), Nonfarm payrolls (Mar), Unemployment rate (Mar), Auto Sales (Mar),
- Europe: Euro area unemployment (Feb), UK PMI manufacturing (Mar)
- Asia: China PMI manufacturing
Markets Data 29 / 03/ 2016