Morning Minutes

Stocks Climb as Focus Turns From Data To Meetings



With the hubbub surrounding yesterday’s stronger than expected US inflation number, investor focus has turned to a series of political and central bank meetings being held over the next few days. The G-7 annual leaders summit starts today with finalization of a 15% global minimum corporate tax that their finance ministers agreed to last weekend at the top of the agenda.

Any progress at the G-7 between President Biden and PM Trudeau on reopening the US-Canada border to non-essential travel may also attract interest, particularly in travel related sectors (airlines, hotels, etc.). That group may have a bit of a setback today with Royal Caribbean Cruises announcing that two passengers on an all-vaccinated cruise tested positive for asymptomatic COVID but its shares are only down about 2.5% so investors may be shrugging it off, which could be seen as a sign of confidence in the global reopening.

Into next week, the focus may turn to two notable meetings being held next Wednesday, the first summit between US President Biden and Russian President Putin, and the June Fed decision, statement and member projections. Of the two, the latter is likely to be of more concern to investors. Interestingly, despite a big jump in US consumer prices last month, investors don’t appear to be overly concerned about that possibility the rising inflation pressures forcing the Fed to cut back on stimulus. On the inflation news, the US 10-year treasury yield went down, not up as many would have expected, and remains below 1.50%, indicating that investors agree with FOMC members who have suggested a spike in inflation is likely transitory.

US stock market action was mixed yesterday, with the NASDAQ gaining 0.8%, the S&P 500 rising 0.5% but the Russell 2000 falling 0.7%. This morning finds US index futures up 0.1%-0.2%, while in Europe the FTSE and DAX are both up about 0.5%. Copper has roared back today with a 2.0% gain, while WTI and Brent crude oil contracts are flat.    

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Colin Cieszynski, Chief Market Strategist

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

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