Monday, June 10, 2013
Stocks today will likely sustain the positive momentum from last
week's favorable jobs report. Stronger than expected overnight
economic data out of Japan should also help sentiment and help
ease worries about reversals in that country.
The economic calendar is on the thin side this week, with
Thursday's Retail Sales data the only top-tier report on deck.
Attention now shifts to next week's Fed meeting and the Bernanke
press event. My sense is that stocks will aimlessly drift in the
run up to the Fed announcement on Wednesday, most likely in the
Stock market investors interpreted Friday's jobs report as QE
friendly - not strong enough to prompt the Fed to start cutting
back on its monthly bond purchases, but good enough to reassure
about the economy's growth momentum. The bond market interpreted
the result differently, pushing benchmark yields higher,
indicating that it saw the Fed moving towards tapering the pace
of its bond purchases.
The Wall Street Journal article by Jon Hilsenrath Friday
afternoon indicating no changes to the Fed's view of the economy
after the jobs report. Mr. Hilsenrath has a well-earned
reputation for solid Fed sources - some would even say as an
unofficial Fed mouthpiece - and his Friday report could very well
be not that far from the central bank's official stance.
SPDR-DJ IND AVG (DIA): ETF Research Reports
ISHARES TR-2000 (IWM): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
PRO-ULS L20+YRT (TBT): ETF Research Reports
To read this article on Zacks.com click here.
We know that Bernanke & Co are concerned about the impact of
the sequester and other tax changes on the economy. As long as
they don't see any material loss of momentum in the economy,
along the lines of what we saw in Friday's jobs report, they will
be comfortable moving towards the 'taper' decision. The market's
positive reaction on Friday will only make it easier for them to
move in that direction.
Director of Research