TRACKRECORD DAILY
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TRACKRECORD DAILY

Do you really want to fight the Fed?

It truly doesn’t pay to fight the Fed, and the message from Fed Chair Powell yesterday was as clear as it can be.

MARKET OBSERVATION

Will Rent Take The Inflation Baton?

Source: Zillow’s Research

DAY AHEAD

Notable releases for the day will be US Advance GDP q/q which is expected to come in at +8.5% and the Fed’s preferred measure of inflation, the PCE index. Risk will continue to be driven by tech earnings and Chinese equity rout/recovery.

TRADING PLAN

1. Currencies:

WHAT HAPPENED YESTERDAY

Market movements as of New York Close 28 Jul 2021
  • The U.S. Dollar Index decreased -0.2% to 92.26. GBP was up +0.15% at 1.3904, holding near a two-week high, with analysts attributing its firm tone to COVID-19 cases in Britain declining over the past seven days. CNH pulled away from three-month lows hit on Tuesday, when it experienced its biggest daily losses since October, after the country’s stock market stabilized following a bruising couple of days.
  • US 2-year Treasury Bond yield was unchanged at 0.20%, and the 10-yr yield increased 1 basis points to 1.26%.
  • Large-cap indices closed mixed on Wednesday, as the market digested mixed earnings reactions in high-profile names and a policy announcement from the Fed that was largely in-line with expectations. Small-cap and micro-cap stocks saw the biggest gains.
  • The S&P 500 (unch) closed flat while the Dow Jones Industrial Average decreased -0.4%. The Nasdaq outperformed with a +0.7% gain but noticeably trailed the Russell 2000 (+1.5%) and iShares Micro-Cap ETF (IWC 144.42, +2.40, +1.7%).
  • Apple (AAPL 144.98, -1.79, -1.2%), Microsoft (MSFT 286.22, -0.32, -0.1%), and Alphabet (GOOG 2721.88, +8.33, +3%) headlined the earnings calendar and came through with record-setting quarters. The negative reaction by Apple’s stock is due to warning of headwinds in the next quarter due to semiconductor chip shortage. Facebook beats earnings expectations, but warns of significant growth slowdown. Facebook shares fell as much as -5% in extended trading on Wednesday after the social media company called for revenue growth to slow in the quarters ahead, even as second-quarter results came in ahead of estimates.
  • China’s securities regulator convened a virtual meeting with executives of major investment banks on Wednesday night, attempting to ease market fears about Beijing’s crackdown on the private education industry. Chinese authorities have become uncomfortable with a sell-off that sent the nation’s key stock indexes to the brink of a bear market on Wednesday morning.

HEADLINES & MARKET IMPACT

U.S. Senate advances roughly $1 trillion bipartisan infrastructure bill

Notable Snippet: A roughly $1 trillion bipartisan infrastructure investment bill advanced in the U.S. Senate on Wednesday, passing a key milestone that moves the emerging legislation toward formal debate and possible passage. The Senate voted 67–32 to take the first procedural step toward debating the measure that has the support of Democratic President Joe Biden.

China state-owned daily urges calm after market rout

Notable Snippet: A Chinese state-owned securities newspaper urged calm on Wednesday after investors dumped mainland shares for a second day on worries over the impact of tighter government regulations. Regulatory moves aimed at the education, property and technology sectors sparked heavy selling this week in Chinese markets, and have left global investors bruised and uncertain over the outlook for investments in Chinese firms.

China’s new ambassador arrives in U.S. with words of optimism

Notable Snippet: China’s new ambassador to Washington, Qin Gang, on Wednesday wished the United States victory against COVID-19 and said great potential awaited bilateral relations, striking an optimistic tone as he arrived at his new post amid deeply strained ties. Qin’s arrival comes days after high-level talks in the northern Chinese city of Tianjin between U.S. Deputy Secretary of State Wendy Sherman and senior Chinese diplomats ended with both sides signaling that the other must make concessions for ties to improve.

SENTIMENT

FX

STOCK INDICES

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