Thursday, July 7, 2022

US Market Wrap 07/07/2022

- US stocks rose for the fourth day in a row on hopes that the Federal Reserve will be able to keep inflation under control without tipping the economy into recession.

- The S&P 500 and the tech-heavy Nasdaq 100 both rose. Oil and copper prices rose as the dollar fell for the first time in five days.

- Even as Fed Governor Christopher Waller dismissed recession fears today, the 2 and 10-year Treasury yield curves remained inverted for a third day. Both Waller and fellow hawk James Bullard, president of the St. Louis Fed, supported raising rates by 75 basis points this month.

- In the last two weeks, investors have been caught between fears of runaway inflation and a US recession. The last Federal Reserve meeting demonstrated policymakers' determination to keep raising rates, a promise reiterated by St. Louis Fed President James Bullard today. However, a flurry of economic data released this week suggested slower growth, calming investors' concerns about the pace of tightening required. All eyes will be on the US jobs report on Friday for more clues about the Fed's rate-hiking path.

- Worries about a severe recession may have been alleviated as well by recent data showing that consumer spending has remained resilient despite inflation. An inverted yield curve, on the other hand, indicates that recession fears are not over.

- Commodities rose today after it was reported that China's Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan ($220 billion) in special bonds this year.

- In the United Kingdom, Johnson resigned as Prime Minister amid a series of scandals. The pound gained up to 0.8% as a result of the news.

Written July 07, 2022 by Charbel Constantine

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