The Tuesday Market Minute
- Global stocks scale to fresh record highs, while European stocks ride their longest winning streak in two years, as improving growth prospects, dovish central banks and low volatility boost markets.
- Bank of America's fund managers' survey suggests 72% think inflation pressures are transitory, with nearly two-thirds not expecting any move on tapering from the Fed until September.
- Benchmark 10-year note yields edge higher, to 1.506% while the dollar index gains 0.05% 90.593 ahead of tomorrow's Fed statement.
- Bitcoin holds gains over the $40,000 mark following comments from Tesla CEO Elon Musk says he could resume accepting the cryptocurrency as payment if miners up their clean-energy mix.
- CDC data shows 145 million Americans have now been fully vaccinated against the coronavirus, with around 310.6 million doses administered as of Monday.
- U.S. equity futures suggest a modestly firmer open on Wall Street following weaker-than-expected May retail sales and a 6.6% surge in factory gate inflation.
U.S. equity futures nudged higher Tuesday, while the dollar held at multi-week highs against its global currency peers and oil prices extended recent gains, as investors kept risky market bets in check ahead of the start of the Federal Reserve's two-day policy meeting.
Searing inflation data last week, as well as a grim assessment of the Fed's stance on 'transitory' price increases from billionaire investor Paul Tudor Jones yesterday, added at least some upward pressure on bond yields in overnight trading, with benchmark 10-year note yields rising to 1.506%, but most economists still expect the Fed to delay any move to begin phasing out bond purchases until September.
Bank of America's closely watched survey of global fund managers, meanwhile, noted that 72% of those polled in this month's edition say inflation is likely transitory.
And with growth prospects improving as major economies fully exit their pandemic malaise, the extended support from both the Fed and the European Central Bank has taken global stocks to another all-time high Tuesday, with European stocks riding their longest winning streak in more than two years.
U.S. stocks are also looking for another fresh opening bell peak for the S&P 500, which closed at a record 4,255.15 points last night, with the CBOE's benchmark volatility gauge, the VIX, holding at the lowest level in more than a year even as May retail sales slumped 1.3% from April as the impact from American Rescue Act stimulus continues to fade and consumer prices rise at the fastest pace in more than a decade.
Futures contracts tied to the Dow Jones Industrial Average suggest a modest 20 point opening bell gain, with a 5 point bump priced in for the S&P 500 and a 5 point advance from the tech focused Nasdaq's record high close on Monday.
Boeing (BA) - Get Report shares are likely to be in focus today as President Joe Biden meets with European Commission President Ursula von der Leyen in Brussels amid reports the two will hash out an agreement to end a two-decade long trade spat over unfair subsidies between the planemaker and its European rival Airbus SE (EADSY) - Get Report.
Oil prices fought through a firmer U.S. dollar and positive signals from tri-lateral talks between Washington, Brussels and Tehran over the fate of the abandoned 2015 nuclear proliferation agreement that could end sanctions on Iran and allow it to resume selling its crude on global markets.
Brent crude contracts for August delivery, the global benchmark, added 68 cents from Monday's close in New York to trade at $73.53 per barrel while WTI crude was marked 66 cents higher at $71.54 per barrel.
In overseas markets, Europe's Stoxx 600 traded a fresh record high of 459.92 points, while Japan's Nikkei 225 rode a weaken yen, which boosted export stocks, to a 0.96% gain that lifted the benchmark to 29,441.30 points.
China stocks returned from Monday's holiday to trade lower, however, as investors got their first chance to react to the hard G-7 assessment of Beijing's foreign and domestic policy ambitions.