Spreadex Market Update
US data fails to provide clear path for Federal Reserve
Personal spending also missed its target, whilst personal income easily surpassed expectations. Where does this leave the Fed? Likely just as confused as it has been for the past few months. The consistent inconsistency in US figures remains a problem; whilst data has begun to err on the side of the positive, it still isn’t showing the kind of robust growth the Fed has claimed it needs to see. However, this data was good enough to lend a helping hand to the dollar, which exhibited more of its recent mastery over the pound and the euro, in the process damaging the US markets.
The aggressive disparity between dollar and Dow provides its own problem for the Fed; the central bank is searching for good data, but it is such good data that is driving up the dollar, scaring off indices investors and heightening fears over what a rate hike steroid injection could do to the greenback. It’s the kind of situation that has led to the worst S&P500 January to May performance in half a decade. If the Fed wants to break this frustrating trend then, sooner rather than later, it will have to set out some kind of firm action that goes beyond implied intentions.
The Eurozone had a trademark volatile afternoon, even if its swings didn’t extend to their usual depths. The region saw a bizarre flurry of gains around lunch time following a swiftly denied, and highly implausible, report that a Greek deal would be announced at some point this Monday, rumours that seem even more farcical given that Greece’s chosen IMF representative Elena Panaritis declined to take up the position following the controversy that surrounded her appointment. With the Greek government seemingly as divided as the country is with its creditors, investors look set for a long, frustrating, and Greek-heavy week.
The FTSE was sort of an afterthought this Monday, as it turned in a dismal performance as the day went on. The lack of investor intrigue the UK at the moment (at least until EU referendum discussion get fully underway) means that the FTSE is largely trading in the shadow of the US and the Eurozone, and with both of those regions displaying their own bearish trading atmosphere the UK index followed suit.
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