After two days of significant declines, Wall Street stabilised during Tuesday’s session, allowing major indices to tack on modest gains. Hopes of a dovish tone from the Federal Reserve tonight – even if that does come at the expense of another quarter point rate hike – is providing some support, whilst optimism over a US/China trade deal being struck is also helping. The US Treasury Secretary has confirmed that the two sides will meet again after the new year, in a bid to resolve differences before the hard stop deadline of March 1st triggers fresh tariff hikes.
The modest gains seen at today’s open however won’t be sufficient to detract from the fact that US equities are set for their worst December performance since the depression almost a century ago. Some year-end short covering may lend support, but there’s little to suggest right now that the December 2002 losses of 6% can’t be eclipsed. Beyond the Fed – which is without doubt a significant draw – there isn’t much else on the calendar today. Despite that trade optimism, we’re looking at a gloomy end to a hugely volatile year.
Ahead of the open we’re calling the DOW up 43 at 23,720 and the S&P up 5 at 2551.
Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support