Analysts at ANZ explained that the S&P 500 hit a fresh high overnight, topping its recent January 2018 high (to be up more than 7% over the year to date).
Key Quotes:
“The index was up 0.4% on the day on the back of rises in consumer discretionary shares. European shares were also higher by about a half percent. However, the FTSE fell 0.3%. Global yields were higher with treasuries up 2-3bps across the curve. The 10-year US note is trading just shy of 2.85%. The US dollar fell against the majority of the G10. Sterling (on the back of Brexit headlines: Brexit: chief negotiators vowed to make negotiations continuous – ANZ) and euro led gains. Most commodities rose, but softs continued to struggle. WTI oil prices rose 1.4% and gold climbed 0.3%. Wheat was down 2.6% with corn down 0.6% and soy off 0.8%.”
“Overnight Dallas Fed President Robert Kaplan (non-voter) said the Federal Reserve should continue hiking rates until they hit neutral and then pause. He said, “I would be inclined to step back and assess the outlook for the economy and look at a range of other factors – including the levels and shape of the Treasury yield curve – before deciding what further actions, if any, might be appropriate.” He added that he is watching the yield curve closely and that he does not discount the significance of an inversion. He believes it will be 3-4 more hikes to neutral.
This follows yesterday’s comments from Federal Reserve Bank of Atlanta President Bostic (voter), who also expressed concerns about inverting the yield curve. Markets are looking ahead to Jackson Hole Symposium on Friday (entitled, “Changing Market Structure & Implications for Monetary Policy”) where Federal Reserve Chairman Jerome Powell will speak. FOMC minutes are also out tomorrow.”
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