US futures are trading higher this morning and starting off where they left last week. Although, the dovish FOMC tone will still be still very much on the investor’s dashboard, but the main spotlight will be towards the upcoming earning as a number of investment banks will report their earnings this week. Investors are fairly sanguine about the markets given that the Fed has less odds in their favor if they want to raise the interest rate.
European markets are trading almost flat after a remarkable week of gains and this represents that the traders may start to book some profit. In Asia, most of the hopes are still attached with the People Bank of China and investors are hoping that the bank will announce another of quantitative easing to battle the slow growth in the country. What traders are hoping that later this month when the government will represent its five year plan, it will give them a clearer idea about the path which the central bank will be taking and hopes are that this will have more stimulus.
Back in the US, it is important once again that we differentiate noise from reality. One fact cannot be ignored that the Fed are itching to raise the rates and in their public comments they will very much make it clear that they are still on the path to raise the interest rates later this year and it is their ultimate goal. However, if the Fed is truly data dependent, then the economic data are actually deteriorated further since the US NFP data were released. So, the data are deteriorating and the Fed is itching to raise the rates. Who will win this race, it is something only time will dictate.
Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam