Solar Eclipse Day Arrives With Traders Digesting a Quiet Weekend

Overseas markets rallied to start the trading week overnight in a move to catch up to Friday’s North American rally. Gains of 0.9% for the Nikkei, 0.6% for the Dax, and 0.2% for the FTSE, were moderate, however, compared with Fridays US index gains of 0.8% to 1.2%. US index futures are flat this morning, digesting Friday’s moves.

The biggest news over the weekend was the lack of news from the Middle East. Specifically, that Iran did not attack Israel as many had feared. US Crude Oil is down 0.8% so far today on the potential easing of tensions, although gains in haven plays like Gold rising 0.6% and Silver climbing 1.4% suggests the situation remains volatile.

The US 10-year treasury note yield has rallied up above 4.40% this morning with last week’s signs of a strong US economy leading traders to scale back their expectations for rate cuts this year. This week’s economic news is all about inflation with US Consumer Prices coming out on Wednesday, followed by Producer Prices on Thursday. The Bank of Canada, European Central Bank and Reserve Bank of New Zealand are all having meetings this week, with decisions and statements that could indicate if central bankers are sticking *with or ready to move off of their “stay the course, higher for longer” party line of the last few months.

There is a Solar Eclipse occurring across much of North America this afternoon, passing closest to the exchanges in New York and Toronto during the last hour of trading. While such an event should not have an impact on trading, markets are psychological and sometimes strange things can happen. If nothing else, volumes may drop off as people go outside to watch.

The main event for the coming week is the start of earnings season on Friday with several big US banks reporting results. So far, confession season has been quiet, which also can be seen as a sign of a robust economy.   

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