After a choppy overnight session for US index futures, Wall Street is currently looking at a relatively flat start to the week’s trade. There’s still an ongoing debate as to whether the big slide in oil prices we’ve seen of late should be viewed as a cause for concern – moves like this are often a precursor for an equity market collapse - or whether this is simply the response to the unexpected number of export waivers which were provided to Iran in the wake on new sanctions being applied. Regardless of that however, Friday’s Michigan consumer sentiment figure impressed, underlining the Federal Reserve’s commitment to ongoing rate hike as they bid to keep inflation in check. So long as rates are rising, then equities will end up on the back foot and the consequent rising value of the dollar will leave US exporters – and many emerging market economies – struggling as a result.
We’ve got a very quiet day ahead in terms of economic data globally, although that will change tomorrow when the latest US federal budget figures are announced. A big jump in the deficit is expected here and that in turn could cause something of a shock, although if the news does apply any downside pressure on the greenback, again it might just help fuel this equity rally boom once again.
Ahead of the open, we’re calling the DOW down 19 at 25970 and the S& down 1 at 2780.
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Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support