Morning Minutes

Stocks Rebound, Gold Retreats as Banking Fears Ease For Now

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Building on yesterday’s gains of 0.4% to 1.2% for US markets Monday with the Dow leading the bounce, US index futures are up 0.6%-0.9% this morning with Dow Futures once again leading the way. European indices are also rallying with the FTSE and Dax both up about 1.7%. The recent rush of capital into defensive havens appears to be receding with Gold down 0.8% and the Japanese Yen down 0.7% this morning.

Although the reaction may have initially been delayed, investors appear to be reacting favorably to recent steps taken by the central banks led by the Fed and the Swiss National Bank, and major banks led by JPMorgan Chase and UBS to help stabilize struggling banks and shore up confidence in the banking system. Major US banks like JPMorgan, Citigroup, Bank of America and others are up 2-3% in premarket trading while regional banks are up more such as a 7.2% premarket rise for PacWest.

The US Treasury Note yield has rallied back up toward 3.60% this morning as investor focus turns to this week’s Fed meeting. The US central bank is expected to raise the Fed Funds rate by 0.25% when it announces it latest interest rate decision at 2:00 pm EDT tomorrow. Projections from FOMC members on GDP, inflation, and interest rates, plus comments in the statement and press conference may also be closely scrutinized for hints as to whether the Fed plans to continue monetary tightening or take a break.

Inflation pressures in Canada continue to ease, based on today’s Consumer Price Index report (5.2% vs street 5.4% and previous 5.9%). US Existing Home Sales are due at 10:00 am EDT.   

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Colin Cieszynski, Chief Market Strategist

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

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