|Day's Range||1.7980 - 1.8490|
|52 Week Range||1.4290 - 3.2480|
Technically speaking, the major U.S. benchmarks have weathered a September oil shock against a still comfortably bullish bigger-picture backdrop, writes Michael Ashbaugh.
The New York Federal Reserve bank said it was carrying out up to $75 billion worth of repuchase agreements, or repo, on Tuesday between 9:30 a.m. Eastern to 9:45 a.m. They said the move would help bring back the central bank's benchmark interest rate, or the federal funds rate, back to its target range of between 2% to 2.25%. Market participants have complained this week that a lack of liquidity in funding markets has pushed the fed funds rate above the interest rate on excess reserves, and that the central bank had lost its grip over short-term interest rates. Analysts say the repurchase operations will boost reserves at banks and help ease funding pressures.
U.S. Treasury yields retreat on Tuesday as investors gear up for the Federal Reserve’s two-day meeting, from which a quarter point rate cut is expected.
Treasury yields fall Monday, reversing a chunk of last week’s surge, after an attack on Saudi Arabian oil production facilities sends oil prices higher.
Investors are shunning higher-priced, sturdier stocks in favor of those that may have missed out on the love earlier in the year.
A drone attack on Saudi Arabian oil facilities underlines how global geopolitical risks have continued to draw flows into haven assets.
What’s left for the Federal Reserve to do at its rate-setting gathering next week now the U.S.’s main stock indexes are on the cusp of records again ?
(Bloomberg Opinion) -- September is only halfway done and already the S&P 500 Index is up 20% for the year. This is a remarkable achievement, given that earnings growth has stalled and the bond market is pricing in almost a 40% chance of a recession over the next 12 months. That just shows the degree to which lower interest rates have supported stocks. And yet, as is often the case in life, too much of a good thing isn’t always, well, good.This year’s rally – during which the S&P 500’s forward price-to-earnings multiple expanded to 17.6 from 14.5 at the start of January – can be credited to the Federal Reserve’s dovish pivot, which led to the central bank’s first rate cut since 2008 and sparked big declines in market rates. The yield on the benchmark 10-year Treasury note dropped to as low as 1.43% earlier this month from 2.80% back in January.Simple discounted cash-flow analysis shows how lower rates make future earnings more valuable now, justifying higher multiples for equities even without profit growth. So, logic would dictate that the lower rates go, the better for equities. But the experience in Europe shows that there comes a point where ever lower rates begin to work against stocks.In a research note last week, the strategists at Bank of America pointed out how even though 10-year bond yields in Germany have fallen below zero, stocks there only trade at a multiple of about 14 times earnings. That’s little changed from mid-2014, when yields were around 1.25% and the European Central Bank cut its benchmark deposit rate to below zero. The same is true for the broader euro zone, with the Euro Stoxx 600 Index trading at 14.5 times projected earnings, not much different from mid-2014.Of course, the euro zone’s struggles are worse than the U.S. Still, the increasing globalization of the world economy means America is having a much harder time shrugging off the slowdown elsewhere. Morgan Stanley says the U.S.’s share of global gross domestic product has shrunk from 22% in 1990 to 15% today. That’s a big reason traders are pricing in at least three more Fed rate cuts over the next 12 months, bringing its target rate for overnight loans between banks to 1.50% from 2.25% currently.On top of that, the number of Wall Street strategists slashing their Treasury yield estimates has grown in recent weeks, citing the outlook for weaker global growth and inflation. UBS Group AG and BNP Paribas SA, which are among the select group of dealers authorized to trade with the Fed, both slashed their 10-year forecasts, predicting yields will drop to 1% by the end of 2019. Could yields go even lower, tracking those in Europe and Japan by following below zero? Former Fed Chairman Alan Greenspan doesn’t thing that’s a crazy idea, telling Bloomberg News last month that he wouldn’t be surprised if they turned negative.It’s true that the stock market posted a massive rally between early 2009 and mid-2015, rising as much as 215%, as the Fed kept rates near zero and pumped money directly into the financial system via quantitative easing. But that was a time when investors largely believed that central banks still had a lot of arrows left in their quivers to stimulate the economy. That’s not really the case now. The S&P 500 fell four straight days after the Fed cut rates on July 31, dropping a total of 5.59%.Also back then, profits were in recovery mode and stocks were relative cheap, with the forward price-to-earnings ratio holding below 14 for much of that time and peaking at around 17 times in late 2014 – about where it is now - just before the S&P 500 turned in its first annual decline since 2008. This year, though, earnings growth is flat and Bank of America’s strategists are telling its clients that forecasts for an 11% increase next year are “too high.” Stocks have had a good run, with the S&P 500 closing last week at 3,007. The median estimate of strategists surveyed by Bloomberg in January only expected the benchmark to rise to 2,913 this year. But with economists moving up their time frame for when the next recession will hit to 2020 from 2021, earnings estimates coming down and price-to-earnings ratios on the high side, it won’t be easy for stocks to keep marching higher even if the Fed does continue to slash rates. To contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The Dollar/Yen could rise sharply after the Fed announcements if central bankers come across as hawkish, leading to the reduction in the chances of another Fed rate cut before the end of the year.
Gold traders will also be watching Wednesday’s Fed interest rate and monetary policy decisions. A 25-basis point rate cut is widely expected, however, traders will be more interested in how Fed policymakers feel about a December rate cut.
With interest rates already at startlingly low levels around the globe, fiscal policy—governments’ decisions on taxing and spending—might be about to replace monetary policy as an economic driver
Treasury yields rise Friday after signs that U.S. consumer spending remain strong and positive developments on trade tensions between the U.S. and China
Speculators' net bearish bets on U.S. 10-year Treasury note futures fell earlier this week at the start of the worst week for the U.S. bond market in at least three years, according to Commodity Futures Trading Commission data released on Friday.
Global central bankers are “intent on smashing Wall Street bears out of the ballpark,” according to Bank of America strategist Michael Hartnett
Gold futures end lower on Friday, giving up earlier gains to feed a loss for the week as appetite returns for assets perceived as risky and bond yields climb.
The cost of imported goods fell sharply in August owing to a decline in petroleum prices, indicating the U.S. is facing little price pressures from abroad.
U.S. retail sales got a big boost in August from purchases of new autos and building supplies, but most other stores reported weak or declining receipts in a sign that consumers trimmed spending toward the end of summer.
The S&P 500, which rose as much as 0.3 per cent in morning trade, closed 0.1 per cent lower with shares in real estate and consumer staples offsetting gains for materials and financials. A decline in tech stocks weighed on the Nasdaq Composite, which fell 0.2 per cent. The Dow Jones Industrial Average climbed 0.1 per cent, cementing its eighth rise in as many days, its longest winning streak since May 2018. Wall Street has steadily approached record levels this week — the S&P 500 is a mere 0.6 per cent away from its all-time closing high — amid expectations for a rate cut by the Fed next week and an apparent thaw in US-China trade relations leading into planned talks.
U.S. Treasury bond yields extended their seemingly-relentless rise Friday, taking benchmark notes to the highest levels since late July and adding a further layer of complexity to next week's Federal Reserve rate decision.
Follow along with MarketWatch reporters as 10 Democratic presidential candidates square off in their third debate in Houston on Thursday night, the first time that top-tier contenders Joe Biden and Elizabeth Warren will share a 2020 debate stage.
The Federal Reserve kicked off its two-day monetary policy meeting. The central bank is expected to make its decision on monetary policy tomorrow afternoon. Tiedemann Advisors CEO Mike Tiedemann joins Yahoo Finance's Julie Hyman, Adam Shapiro, Rick Newman, and Sibile Marcellus to discuss.
The Federal Reserve’s Open Market Committee aren’t the only ones closely watching the risks facing the global economy. Noah Hamman, CEO of AdvisorShares, says investors are staying cautious, too. He spoke with Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Aaron Anderson, Fisher Investments senior vice president of research.