U.S. Stocks Advance With Dollar, Treasuries Mixed: Markets Wrap

Updated on
  • Inflation data and central-bank speeches later this week
  • Pound slides as PM May struggles and Brexit talks go nowhere

Kelly, Rochester on Market Jitters From Tax Reform

U.S. stocks halted a two-day slide, while the dollar edged higher and Treasuries fluctuated as investors awaited clues on monetary policy and tax reform.

The S&P 500 Index eked out a gain as makers of consumer products climbed, outweighing a decline by industrial firms. Ten-year Treasury yields were steady and the greenback advanced against most peers ahead of inflation figures and speeches by central-bank heads later in the week. The pound dropped amid renewed political pressure on U.K. Prime Minister Theresa May. Bitcoin clawed back most of its losses after a big intraday drop.

“We expect it to be challenging to see tax reform get passed here in 2017,” Dan Heckman, a Kansas City-based fixed-income strategist at U.S. Bank Wealth Management, which oversees $150 billion, said in an interview. “The clock is kind of ticking against that,” he said. “We’d expect a lot more volatility than what we have seen. We saw a little glimmer of that last week.”

JPMorgan Asset Management’s David Kelly, chief market strategist, and Nomura’s Jordan Rochester discuss tax reform.

It looks like a busy week for investors. U.S. inflation and growth numbers that could influence the Federal Reserve’s decision on future rate hikes are on the docket. American tax legislation may also play into market thinking after pessimism over the likelihood of successful reforms helped drag global equities down from this month’s record high last week. Also, Mario Draghi, Janet Yellen, Mark Carney and Haruhiko Kuroda speak at a European Central Bank conference on Tuesday.

Terminal users can read more in our Markets Live blog.

Here are some key events investors are watching this week:

  • President Donald Trump continues on the final leg of his tour around Asia. 
  • This week’s data include GDP reports for Japan, Germany, Italy and the euro area, CPI in the U.S., U.K. and Spain, retail sales and industrial output in China, along with Aussie jobs and wages. 
  • Mario Draghi, Janet Yellen, Mark Carney and Haruhiko Kuroda appear at an ECB conference on monetary policy communication. BOE officials address the bank’s future on Thursday, while Draghi speaks a second time Friday. A string of Fed appearances may further illuminate the FOMC’s commitment to a December hike.
  • OPEC publishes its monthly market report Monday, followed by the IEA’s Tuesday.
  • Oil executives are gathering in Abu Dhabi to jostle for access to the Emirate’s oil riches.
  • More details about PDVSA’s bond payments may surface when Venezuela hosts creditors in Caracas at 2 p.m. local time on Monday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.1 percent to 2,584.86 as of 4 p.m. New York time.
  • The Stoxx Europe 600 Index fell 0.7 percent after touching the lowest in almost seven weeks with its fifth consecutive decline.
  • The MSCI All-Country World Index decreased 0.2 percent.
  • The MSCI Emerging Market Index dipped 0.4 percent to the lowest in almost two weeks.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.1 percent.
  • The euro was little changed at $1.1669.
  • The British pound fell 0.6 percent to $1.3114, after touching the weakest in more than a week on the largest fall in more than a week.

Bonds

  • The yield on 10-year Treasuries was steady at 2.40 percent.
  • Germany’s 10-year yield gained less than one basis point to 0.42 percent.
  • Britain’s 10-year yield decreased one basis point to 1.328 percent.

Commodities

  • Gold advanced 0.3 percent to $1,279 an ounce.
  • West Texas Intermediate crude fell 0.1 percent $56.69 a barrel.


— With assistance by Sarah Ponczek, and Samuel Potter

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