Morning Bid: Fed Hawks Re-Emerge, Dollar Pumped
A look at the day ahead in U.S. and global markets from Mike Dolan
Amid all the hand-wringing over the debt ceiling row and background banking anxiety, the U.S. economy is holding up well enough to embolden Federal Reserve hawks once again.
Assumptions about first-quarter and full-year S&P500 aggregate earnings contractions are being revised away alongside euro zone and British recession forecasts, AI and chip-led investment is picking up steam and 'soft landing' hopes for the economy have been rekindled.
A look at the day ahead in U.S. and global markets from Mike Dolan
Amid all the hand-wringing over the debt ceiling row and background banking anxiety, the U.S. economy is holding up well enough to embolden Federal Reserve hawks once again.
Assumptions about first-quarter and full-year S&P500 aggregate earnings contractions are being revised away alongside euro zone and British recession forecasts, AI and chip-led investment is picking up steam and 'soft landing' hopes for the economy have been rekindled.
A look at the day ahead in U.S. and global markets from Mike Dolan
Amid all the hand-wringing over the debt ceiling row and background banking anxiety, the U.S. economy is holding up well enough to embolden Federal Reserve hawks once again.
Assumptions about first-quarter and full-year S&P500 aggregate earnings contractions are being revised away alongside euro zone and British recession forecasts, AI and chip-led investment is picking up steam and 'soft landing' hopes for the economy have been rekindled.
Since early Monday alone, money markets have moved from pricing half a point of rate cuts this year to just 34bp on Tuesday. Economists are even more hawkish and now believe the Fed will not lower its targeted policy rate until the first quarter of next year, according to the survey released by the National Association for Business Economics.
That lifting of the yearend rate horizon is reigniting the dollar - especially against China's yuan, which is hovering close to its lowest levels of the year on doubts about the strength of China's much-touted post-COVID recovery.
Coupled with anxious geopolitics following the weekend G7 summit's call for 'de-risking' of businesses' reliance on China supply chains, Shanghai stocks recorded their biggest one-day fall in a month.
Elsewhere, shares of Julius Baer (BAER.S) slumped almost 8% after the Swiss bank reported only a modest rise in assets under management and money inflows, disappointing investors who had expected it to benefit from Credit Suisse's troubles.
Zoom Video Communications (ZM.O) extended Monday's rally in after-hours trade after it raised its full-year forecasts for revenue and profit even as growth winds down from a pandemic boom and business spending slows in a tough economy.
Events to watch for later on Tuesday:
* Flash May business surveys from the United States, Europe and around the world. U.S. April new home sales. Richmond Fed's May business index, Philadelphia Fed's May service sector survey
* U.S. Treasury auctions 2-year notes
* Dallas Federal Reserve President Lorrie Logan speaks. Bank of England Governor Andrew Bailey speaks in parliament
* U.S. corporate earnings: Palo Alto Networks, Agilent Technologies, Intuit, Autozone, VF Corp