Hey everyone, markets loved what Jerome “Power Ranger Boom Boom” Powell had to say this past Friday at the Jackson Hole Central Bank symposium. Get me take on his thoughts, the markets reaction and where to next.
WEEKLY SOUND BITES:
- U.S. equities gained as US FDA approval of the Pfizer vaccine supported sentiment toward an ongoing economic recovery. S&P, and NASDAQ hit all-time highs as the Russell posted very large gains. Stocks in the energy sector jumped higher as crude oil prices gained about 10% for the week. Stocks fell on Thursday as an attack at the Kabul airport in Afghanistan amid the U.S. military’s withdrawal from the country resulted in casualties however on Friday the FEDs Jackson Hole WY. speech by “Boom Boom” Powell gave the markets a large boost in sentiment. His key statement was essentially saying that the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of the interest rate liftoff…market price action loved this comment, and the race was on this past Friday for record highs.
- The week’s economic data releases were generally positive with July existing home sales rising 2% from June and July new home sales were up 1% from June but down 27% from July 2020. Weekly initial jobless claims ticked up but remained near their lowest levels of the pandemic, indicating that the labor market is still strengthening even as the delta variant spreads in the U.S. The Commerce Department’s revised estimate of second-quarter GDP growth showed that the economy expanded at a 6.6% seasonally adjusted annual rate, slightly above the 6.5% initial reading.
- U.S. Treasuries posted negative total returns as yields increased. The week’s positive economic data helped push yields higher, while improving sentiment toward riskier assets such as equities also weighed on demand for Treasuries, which investors view as a lower-risk asset class. Bond yields are settling into ranges that do not appear to be consistent with a rapidly growing moderately inflating economy.
- The eurozone economy appeared to remain in expansion mode in August, with the early headline number for IHS Markit’s composite Purchasing Managers’ Index (PMI) coming in at 59.5, a strong reading that was down modestly from the 15-year high of 60.2 registered in July. The flash reading for IHS Markit’s UK composite PMI tumbled to 55.3 in August compared with 59.2 in July. Whereas the reading for the manufacturing sector slipped 30 basis points to 60.1, the PMI for the services sector contracted to 55.5 from the 59.6 record during the previous month.
- The Japanese government extended its COVID-19 state of emergency to eight more prefectures. Business activity in Japan’s large services sector shrank at the fastest pace in August since May 2020 and the Japan Services Business Activity Index fell to 43.5 from 47.4 in July. Meanwhile, expansion in the manufacturing sector softened slightly in August with the Manufacturing PMI falling to 52.4 from 53.0 in July.
- Chinese stocks continued to recover from their late-July lows with the PBOC meeting with leading financial institutions to urge them to strengthen credit support to the economy. And in regulatory news, the China Securities Regulatory Commission pledged to cooperate with their U.S. counterparts regarding the auditing of Chinese companies that trade in the U.S.
Enjoy This Week’s Round-Up;
Don’t Be a Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
