NEW YORK (Dow Jones) — Wall Street appears to have decoupled somewhat from movements in the bond market on Monday. Because despite slight increases in bond yields, the stock futures market points to a friendly opening of trading on the cash market. Rising market interest rates have always weighed on stocks in recent days. But traders don’t want to see anything more than a slight recovery after what has been a weak August in mild summer trading. Because the market-wide S&P 500 is still preparing to record its highest monthly loss in the current year.
The market is supported by the surprisingly stable US economy. “The US economy is actually doing very well at the moment. I still believe that inflation can absolutely go down even without a recession,” said David Kelly, chief market strategist at JP Morgan Asset Management. When it comes to the question of how interest rates will continue, investors are hoping for new orientation from the central bankers’ meeting in Jackson Hole, which begins on Thursday. Whether US Federal Reserve Governor Jerome Powell will clarify the further interest rate path on Friday is considered quite unlikely.
While the US economy is bursting with strength despite higher interest rates, the economy in China has turned sluggish. The Chinese central bank has therefore lowered one of its reference interest rates, but this is disappointing because the step was less pronounced than hoped. Traders continue to wait for the big hit in China with a comprehensive stimulus package, which the leadership has practically ruled out. According to market observers, the interest rate cuts underscore the seriousness of the situation. In line with this, analysts are becoming more skeptical: UBS and Nomura lowered their growth forecasts. Traders are again warning of the possible consequences of a full-blown real estate and financial crisis in China. At least on Monday, the reminders seem to go unheeded.
Yields are rising again
On the bond market, prices are falling again and yields are rising. Merchants refer next to the streamline monetary policy the Fed also on the US government’s increased issuance activity in the primary market. After the dispute over the debt ceiling, they attest that the government has some catching up to do. In addition, the Fed is no longer buying, but instead is shrinking the balance sheet, thereby also fueling the rise in yields.
Despite rising market interest rates, the dollar index lost 0.2 percent. Traders speak of an increased risk appetite that weighs on the greenback. According to ING, the dollar should defend its recent premiums and even extend them somewhat. With regard to monetary policy, it is too early to count on an end to inflation. The price of gold is supported by the fallen dollar exchange rate.
Meanwhile, oil prices are rising. The market is increasingly focusing on the hurricane season. According to the trade, this could lead to temporary suspension of production in particularly vulnerable areas such as the Gulf of Mexico.
Palo Alto very tight
Palo Alto up 12.6 percent in premarket trading. The security software provider beat market expectations with its fourth-quarter results. The fact that the outlook for the 2024 fiscal year was slightly lower than analysts had hoped is not a problem.
Meta Platforms gain 0.5 percent. The Facebook parent is likely to present a desktop version of its Threads app this week and step up its competition with the short message service X (formerly Twitter). Tesla recovered 3 percent from last week’s more than 11 percent crash, when the electric car maker scared with price cuts and the introduction of cheaper models.
In contrast, Napco Security Technologies collapsed 38.2 percent after the company found errors in previous financial statements. This had led to excessive key figures for the first three quarters of 2023.
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US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 4.97 +2.2 4.94 54.6
5 years 4.41 +2.0 4.39 41.4
7 years 4.38 +3.7 4.34 41.2
10 years 4.30 +5.0 4.25 42.0
30 years 4.44 +5.8 4.38 46.8
FOREX last +/- % Mon, 8:59 Fri, 17:37 % YTD
EUR/USD 1.0901 +0.2% 1.0878 1.0875 +1.8%
EUR/JPY 159.14 +0.6% 158.21 157.90 +13.4%
EUR/CHF 0.9585 -0.1% 0.9585 0.9586 -3.2%
EUR/GBP 0.8546 +0.1% 0.8547 0.8537 -3.4%
USD/JPY 146.01 +0.4% 145.44 145.19 +11.4%
GBP/USD 1.2755 +0.2% 1.2729 1.2738 +5.5%
USD/CNH (Offshore) 7.2890 -0.2% 7.3350 7.3011 +5.2%
Bitcoin
BTC/USD 26,046.63 -0.5% 26,029.84 26,073.27 +56.9%
CRUDE OIL last VT settlem. +/- % +/- USD % YTD
WTI/Nymex 82.39 81.25 +1.4% +1.14 +4.5%
Brent/ICE 85.73 84.80 +1.1% +0.93 +3.7%
GAS VT Settlem. +/- EUR
Dutch TTF 38.70 36.41 +6.3% +2.29 -53.7%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,896.13 1,889.50 +0.4% +6.63 +4.0%
Silver (Spot) 23.20 22.75 +2.0% +0.45 -3.2%
Platinum (Spot) 911.45 913.53 -0.2% -2.08 -14.7%
Copper Future 3.71 3.71 +0.2% +0.01 -2.7%
YTD relative to previous day’s close
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(END) Dow Jones Newswires
August 21, 2023 08:53 ET (12:53 GMT)