- The stock market recovered at the conclusion of a wild week as traders decreased their bets on a larger Fed raise in July, while scrutinising a slew of Wall Street profits and looking for indications of capitulation that may pave the way for a more prolonged rebound.
-With the expiration of approximately $1.9 trillion in options, American equities reversed a five-day decline. Following Citi spectacular results, banks led gains.
-Swaps are pricing in about 75 basis points of Fed tightening this month, which is still an aggressive lift that has investors concerned about the likelihood of a recession, but is down from a full point earlier this week. Bond yields and the dollar declined.
-Economic indicators were mixed, but it was a dip in US consumer long-term inflation expectations to a one-year low that drew traders' attention. The reason for this is that policymakers may find some satisfaction in the fact that price pressures are not becoming entrenched.
-Another reason for optimism is that two Fed officials expressed reservations about a full-point increase in July. Feds Bostic expressed concern over a large increase, and Feds Bullard said he would delay judgement until the central bank met. He was cited earlier this week as suggesting he preferred a 75-basis-point increase.
