Morning Minutes

Market Impasse Continues as Investors Await Powell Testimony




Coming off a flat to down Monday that saw the Dow, S&P 500 and NASDAQ all finish between -0.1% and +0.1%, the S&P/TSX Composite lose 0.3% and the Russell 2000 drop 1.5% to indicate weakness in small caps, US index futures are flat to slightly higher with Dow Futures down marginally and NASDAQ futures up 0.2%.

Bulls and bears appear to be deadlocked over the future direction of interest rates, particularly in the US where the 10-year Treasury Note yield is holding steady near 3.95%, and the US Dollar. Traders appear to be waiting on today’s testimony to Congress by Fed Chair Powell for hints as to whether the FOMC plans to continue with 0.25% rate hikes (and if so for how long), reaccelerate to 0.50% increases as some FOMC members have called for, or pause its tightening program sometime soon. Traders may get more color in at the next Fed meeting in two weeks which includes both an interest rate decision and member forecasts.

The Australian Dollar is down 0.9% this morning after the Reserve Bank of Australia announced a 0.25% interest rate increase as planned but left the door open to a possible pause in future with comments about evaluating the economy and the impact of increases to date. This was similar language to the last Bank of Canada statement, who is widely expected to pause its rate hike program when it meets tomorrow.

Commodities are struggling again today with Copper down 1.3%, and WTI Crude Oil down 0.5% hanging around $80.00/bbl. China announced trade data overnight where imports came in worse than expected (-10.2% vs street -5.5%) which may be seen as problematic for resource demand with China being a large importer of commodities. Exports, on the other hand, were not as bad as feared (-6.8% vs street -9.4%) but still negative.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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