Morning Markets Aug 22th 2019
Good Friday morning, a big TGIF- Well markets await new home sales
and hmm, wait, wait, yes, Powell speaks at 10am at Jackson Hole with the world watching, Trump ready to tweet-It will be interesting to hear this 'challenges for monetary policy' speech ! It will be interesting to see if he uses the speech as Bernanke at times did to signal upcoming policy moves-his tone will dictate how markets react- I personally don't see him being much different than previous tone, more balanced than dovish-Keep options open for Fed and try to move market expectations more in line with the FOMC (probably meets market in middle, doesn't commit to future cuts, but will try to convince (avoid a tantrum) there is a willingness if needed to move again, bring on 25bp cut in September, data dependent, carefully monitoring going forward tone to try and get market off very aggressive pricing of future cuts, market already toned down ideas of a 50bp cut next month) -Mid-cycle adjustment mindset is what disappointed markets, but yesterday we had some hawkish Fed officials (George and Harker more than Kaplan)- Not easy for Powell as he is dealing with a divided committee, slowing global economy, an angry President and volatile financial markets !! Also at Jackson Hole we have Carney speaking in afternoon, no Kuroda or Draghi (both skipped)- Trump plans to meet with Merkel, Macron, Johnson, Modi, Trudeau, Abe- that should be fun as leaders will be discussing plenty of topics but certainly monetary, fiscal stimulus (Fed/ECB/New regime ECB/Trade wars/German economy) and political uncertainty (Brexit, Italy, HK) !
We BEGIN with stocks rising in Asia !! European stocks are positive ! U.S future rising with Dow +40 area, after rising 49 yesterday (S&P/Nasdaq both fell yesterday) ! VIX 16,5 area ! Treasury yields rising with 2yr 1.62-1.63%/10yr 1.635% (so curve still slightly positive)/30yr 2.125% ! Oil falling to $55.30 ! Gold falling to $1,495 ! USD rising ! LIBOR FELL in 1mo, but rose in 3mo, and jumped 3.7bp in 6mo and up 5.5bp in 1yr !