Equities and Dollar Holding Firm Ahead of Fed Chairman Powell’s Congressional Testimony
July 9, 2024
The Fed Chairman will present semi-annual testimony on monetary policy to the Senate Banking Committee today and the House Financial Services Committee tomorrow. Both hearings begin at 10:00 AM EDT (14:00 GMT). Market speculation about a rate reduction as soon as September’s FOMC meeting got a big lift from Friday’s June U.S. labor market statistics showing 4.1% unemployment (a 31-month high) and on-year wage growth dipping under 4% to 3.9% for the first time in three years. Formerly known as the Humphrey-Hawkins testimony, these events have often elicited significant market reactions, and this one comes just four months before the U.S. election.
The anxiety of U.S. voters remains extremely elevated. President Biden could not have been any more clear and defiant in his rejection of post-debate calls for him to drop out of the race. Whatever the future holds, the 2024 election campaign underscores the need for serious consideration for a constitutional amendment to impose an upper age limit on running for U.S. president, certainly no greater than 70 and even more appropriately a ceiling of 65.
Markets continue to sail through the current political maelstrom with a what-me-worry attitude that would make Alfred E. Newman envious. The weighted dollar DXY index firmed another 0.1% overnight, and the Japanese yen remains just 0.5% from last week’s 38-year low against the dollar of 162.01.
U.S. SPX and Nasdaq futures in pre-open trading were marginally higher than yesterday’s record closings. In the Pacific Rim this Tuesday, share prices advanced by 2.0% in Japan, 1.3% in China, 0.9% in Australia and New Zealand and 0.5% in India. European equities, by contrast, have traded lower today.
The second round of France’s parliamentary election produced a hung parliament, depriving any party of a majority and resulting in a surprise 182-seat plurality for the left-of-center New Popular Front. Macronian centrists captured 163 seats and Le Pen’s rightist RN took 143.
The price of Bitcoin rebounded 1.4% overnight. Oil and gold are little changed.
Ten-year sovereign debt yields have climbed five basis points in France, four bps in the U.K. and Spain, three bps in Germany and Italy and two bps in the United States. With the yen remaining weak, the JGB yield is steady at 1.07%.
On-year growth of 9.7% in Japanese machine tool orders last month exceeded expectations and the 4.2% rise in May, and the economy watchers index, a gauge of the mood of service sector workers, recovered more than anticipated but remained historically low in June.
In Australia, consumer confidence fell to a 6-month low this month. Business confidence, compiled by National Australia Bank, improved to a 17-month high in June, but the companion index of business conditions weakened to a below-average level.
Greek consumer price inflation settled back to a nine-month low of 2.3% in June. That compared to 1.8% in June 2023 and a cyclical peak of 12.1% in June 2022.
Dutch CPI inflation accelerated half a percentage point to a 5-month high of 3.2% last month, having bottomed at -0.4% last November and peaked at 14.2% in September 2022.
Hungarian CPI inflation of 3.7% last month returned to April’s level from 4.0% seen in May and the peak of 25.7% touched at the start of 2023.
Lithuanian producer price inflation edged upward to 0.3% last month from 0.1% in May and -3.4% last November.
British same-store sales fell 0.5% between June 2023 and last month.
Small business sentiment in the United States improved to a six-month high in June.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Powell Congressional testimony, U.S. labor market data and Fed policy
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