Morning Minutes

Stocks Build on Recent Gains Ahead of a US Long Weekend




US index futures are down 0.2% to 0.7% this morning, while over in Europe, the FTSE is flat and the Dax is down 0.7%. US Treasury Yields are on the rise sparking a rally in the US Dollar and selloffs in Bitcoin, which is down 3.8%, and Gold, which is down 1.4%. WTI Crude Oil is up 1.0% but still below $70.00/bbl. 

The FOMC delivered what could be considered a “hawkish hold” pausing interest rate hikes as expected but signaling through the Fed Funds Dot Plot survey that the bulk of Fed members now expect to see potentially two more rate hikes this year. The Fed raised its Core PCE inflation forecast, blaming inflation in wages and services not coming down as quickly as previously hoped. Fed members also raised their GDP forecast and lowered their unemployment rate forecast for this year, reflecting a robust economy and job markets.

This morning, the European Central Bank announced another 0.25% interest rate increase, as had been widely expected since the Europeans are still trying to catch up to the North Americans on monetary tightening. The Bank of Japan meets tonight (no change expected), while the Bank of England and Swiss National Bank meet a week from today.

Today’s North American economic data has been mixed. US Retail Sales (0.3% vs street -0.1% and previous 0.4%), Empire State Manufacturing (+6.6 vs street -15.1 and previous -31.8), and Philadelphia Fed Manufacturing (-13.7 vs street -14.0) were better than expected. On the other hand, Canada housing starts (202K vs street 235K and street 261K) and US weekly initial jobless claims (262K vs street 249K) came in worse than expected. 

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Colin Cieszynski, Chief Market Strategist

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

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