CURRENCY MARKET WRAP
As of Mon Jul 15th, Singapore Time zone UTC+8
Dollar Index +0.05%, 96.82
USDJPY, -0.83%, $107.83
EURUSD, -0.06%, $1.1271
GBPUSD, -0.07%, $1.2572
USDCAD, +0.03%, $1.3034
AUDUSD, +0.11%, $0.7017
NZDUSD, +0.29%, $0.6694
Friday’s advance was supported by continued hope for a rate cut taking place as soon as July 31. Powell’s dovish two-day testimony on monetary policy was followed by an overt call for a lower fed funds rate range. Chicago Fed President, Charles Evans, said on Friday that “a couple rate cuts” are needed in order to boost inflation. Interestingly, this comes just two months after the FOMC voter said that the fed funds rate could remain at its current level until late 2020. The dovish remarks led to another increase in expectations for a 50-basis point rate cut. At the end of the week, the fed funds futures market saw a 21.4% implied likelihood of a 50-basis point rate cut on July 31, up from 5.4% one week ago.
Treasuries started the day in the red, but a daylong rebound lifted all tenors into the green by the close. The 10-yr yield dipped one basis point to 2.11%. The U.S. Dollar Index returned into the neighbourhood of its 200-day moving average (96.77), sliding 0.25% to 96.81.
STOCK MARKET WRAP
S&P500, +0.46%, 3,013.77
Nasdaq, +0.59%, 7,943.24
Nikkei Futures, +0.47%, 21,600.0
The major averages ended the week at fresh record highs after a steady daylong push that was paced by the Dow Jones Industrial Average (+0.9%) while the Nasdaq (+0.6%) and S&P 500 (+0.46%) recorded slimmer gains.
Eight out of eleven sectors recorded gains on Friday, with cyclical groups faring better than the countercyclical side. Industrials (+1.8%) and consumer discretionary (+1.1%) spent the day atop the leaderboard to end the week with respective gains of 1.2% and 2.1%. Industrials rallied alongside heavyweight Boeing (BA 365.33, +6.33, +1.8%) while transport stocks outperformed. The Dow Jones Transportation Average jumped 2.4% with trucking names leading the push. JB Hunt (JBHT 92.94, +5.18, +5.9%) and Ryder (R 57.53, +3.14, +5.8%) spiked near 6.0% apiece, even though peer, U.S. Xpress (USX 4.32, -0.53, -10.9%), warned that industry conditions have worsened.
On the downside, the health care sector (-1.2%) spent the day behind the remaining groups. Drugmakers were pressured after Illumina (ILMN 305.05, -58.61, -16.1%) issued weaker than expected guidance for Q2 and lowered its outlook for the fiscal year. Another sector component, Johnson & Johnson (JNJ 134.30, -5.81, -4.2%), slid to a five week low after Bloomberg reported that the company could face a criminal probe into undisclosed health risks associated with JNJ’s baby powder.