Equity Futures Better Before Busy Day
Risk is back on the table. As investors await labor data, a key survey on the services sector, and of course the policy announcement from the central bank’s monetary policy board, equity futures are all looking up.
More than two hours ahead of the bell, the S&P 500 looks to open 7 points higher at 1048.70 and Dow futures are up 64 points to 9,836.
The main action may not be in equities though. Gold hit a new record high Tuesday at $1,089 per ounce, and this morning gold futures are up further to $1,094.60. Meanwhile, oil futures are back above $80, and yields on the benchmark 10-year Treasury Note are up 1 basis point to 3.48%.
Analysts have said the US dollar will rally if the Federal Reserve shows any signs of tightening rates sooner than expected. However, in a morning note HFE’s Ian Shepherdson said any word on tightening would shocking given chairman Ben Bernanke’s background as a student of the Great Depression.
“If you learn one thing as a student of depressions, it is that premature tightening is the kiss of death. And if your learn anything from watching the pas de deux between the markets and the Fed, it is that when the Fed suggests something might change in the futures, the markets will react as though it has already happened. The Chairman has undoubtedly absorbed both lessons.
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