CURRENCY MARKET WRAP
As of Fri Jul 12th, Singapore Time zone UTC+8
Dollar Index +0.05%, 97.11
USDJPY, +0.24%, $108.60
EURUSD, -0.07%, $1.1250
GBPUSD, +0.12%, $1.2521
USDCAD, -0.03%, $1.3069
AUDUSD, +0.19%, $0.6972
NZDUSD, +0.25%, $0.6661
Fed Chair Powell wrapped up his semiannual testimony on Capitol Hill on Thursday, which didn’t differ too much from yesterday’s session. Powell’s dovish tone assured the market’s thinking that the Fed will cut the fed funds rate by at least 25 basis points at the July 30-31 FOMC meeting.
Higher-than-expected consumer inflation data, however, did temper some expectations for a 50-basis points rate cut. The core reading in the Consumer Price Index for June rose 0.3% (consensus 0.2%), raising the yr/yr rate to 2.1% versus 2.0% in May. According to the fed funds futures market, the implied likelihood for a 50-basis points cut declined to 20.4% from 26.6% yesterday.
Separately, the White House abandoned its proposal to eliminate rebates from government drug plans, which benefited shares of health insurers and companies with exposure to pharmacy benefit management.
The 2-yr yield increased three basis points to 1.85%, and the 10-yr yield increased six basis points to 2.12%. The U.S. Dollar Index was relatively unchanged, +0.05% at 97.11. WTI crude declined 0.4% to $60.26/bbl.
STOCK MARKET WRAP
S&P500, +0.23%, 2,999.91
Nasdaq, -0.08%, 7,896.78
Nikkei Futures, +0.73%, 21,658.0
S&P 500 (+0.23%) and Dow Jones Industrial Average (+0.9%) closed at record highs on Thursday amid lingering rate-cut optimism. The Dow also hit the 27,000 level for the first time, but the Nasdaq Composite (-0.08%) and Russell 2000 (-0.5%) were unable to keep pace.
Thursday’s leaders included most of the S&P 500 cyclical sectors. The industrials (+0.7%), financials (+0.6%), and materials (+0.4%) sectors finished atop the standings. The real estate sector (-1.2%) was the day’s outright laggard amid higher U.S. Treasury yields.
In earnings news,Fastenal (FAST 30.36, -0.89, -2.9%)disappointed investors by missing profit estimates. Delta Air Lines (DAL 60.16, +0.69, +1.2%), on the other hand, reported better-than-expected results and raised its full-year guidance.