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Bond traders doubt the Fed (again), an update on China’s housing boom, and U.S. stocks surge as geopolitical tensions ebb. Here are some of the things people in markets are talking about today.
After briefly falling below 2.2 percent following Friday’s underwhelming inflation data, the 10-year Treasury yield managed to edge higher on Monday. But traders are starting to cast doubt on the Federal Reserve’s plans to hike interest rates two more times this year, as implied by the so-called dot plot. While an increase in September is fully priced-in, traders see about a 1-in-4 chance that the central bank will lift its policy rate again by year-end. In other Fed news, former Treasury official Randal Quarles is said to be President Donald Trump’s pick to serve as the first-ever supervision chief at the central bank.
Chinese Real Estate
Chinese property prices for March are scheduled to be released at 10:30 a.m. Tokyo time. First-quarter growth figures showed residential investment has remained robust despite policy maker efforts to cut speculation and tighten liquidity in light of frothy activity in some cities. Meanwhile, Berkshire Hathaway Inc.’s real estate brokerage is trying to get more Chinese citizens to buy property—in the U.S.
U.S. Stocks Jump
Investors fearful of holding stocks ahead of the long weekend showed a huge appetite for U.S. equities Monday. The S&P 500 index booked its biggest advance in six weeks, offsetting much of last week’s retreat. All 11 sectors moved higher. Meanwhile, the CBOE Volatility Index, commonly known as the VIX or “fear index,” saw a sizable decline of 1.3 points after rising to its highest levels of the year Thursday. Investors await a busy week of earnings reports from corporate America.
A State Department official said the U.S. has received encouraging signals from China pn the nation’s willingness to confront North Korea about its nuclear program, which helped contribute to risk-on sentiment Monday. The failure of a missile launch by Kim Jong Un’s regime this weekend reportedly reduced the need for a U.S. military response. Trump has pushed for China to take the lead in dealing with its neighbor in exchange for better treatment on trade issues.
A retreat in iron ore prices is weighing on the S&P/ASX 200 equity futures, while Nikkei 225 futures are pointing to a positive open as of 6:30 a.m. The yen retreated modestly against the greenback Monday as the bid for safe-haven assets dissipated. In China, the Shanghai Composite will be looking to keep one streak alive: The index hasn’t suffered a decline of 1 percent or more for 82 consecutive sessions, according to Bespoke Investment Group.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- United CEO promises customer-centric approach after dragging incident.
- Erdogan’s ‘Hans-off’ approach to European critics.
- Canada’s housing boom: Now with uninsured mortgage-backed securities.
- What good is a 9,800 percent stock jump if you can’t bank it?
- The French presidential election is being priced like the European debt crisis.
- Fate of the Furious gets to $1 billion yuan, fast.