• 99 days Could Crypto Overtake Traditional Investment?
  • 104 days Americans Still Quitting Jobs At Record Pace
  • 106 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 109 days Is The Dollar Too Strong?
  • 109 days Big Tech Disappoints Investors on Earnings Calls
  • 110 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 112 days China Is Quietly Trying To Distance Itself From Russia
  • 112 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 116 days Crypto Investors Won Big In 2021
  • 116 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 117 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 119 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 120 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 123 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 124 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 124 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 126 days Are NFTs About To Take Over Gaming?
  • 127 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 130 days What’s Causing Inflation In The United States?
  • 131 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Stocks Lower, Bonds Higher in Light Overnight Trading Ahead of U.S. GDP

Stock Indices are trading lower and Treasury Bonds are moving higher under thin trading conditions ahead of this morning's U.S. GDP report.

Economists estimate that the GDP report will show a gain of 1.6%. A higher number should be outright bullish for stocks. Things could get tricky if the report comes out lower than expected. In this case, look for whip-saw like action. Traders are likely to sell the market initially on a lower number then buy it back cheaper. A lower number will mean the Fed will definitely move toward additional quantitative easing. Stock traders seem to love it when the Fed gives them more money with which to play.

A better-than-expected 2Q GDP number should pressure Treasury bonds as traders will be encouraged to reduce their speculative long positions placed in anticipation of additional QE by the Fed. A number less than 1.6% is likely to trigger a rally to a new contract high through 135'19.

Overnight, the U.S. Dollar rose slightly against the Euro after Moody's downgraded Spain's sovereign rating, but quickly lost ground when traders realized the cut wasn't as big as some had feared. Moody's cited a weak outlook for growth, deteriorating public finances and a worsening debt situation as the main reasons for the ratings reduction.

Recap

On Wednesday, U.S. stock markets closed lower under thin trading conditions as most major market participants took the day off ahead of today's 2Q GDP report. This left the market wide open for day-traders and scalpers who created a little volatility early before eventually settling down after the mid-session.

After falling from its Tuesday night high, equity markets traded in a choppy pattern. Investors continued to buy the breaks Wednesday morning like they have been over the past five days, creating a rangebound trading environment. Without any major U.S. economic reports to guide them, investors were forced to focus on the falling Dollar and rising Gold prices.

The Dollar continued to weaken against most major currencies on speculation the Fed will ease once again in the form of additional quantitative easing. The Euro saw another surge to the upside although sovereign debt issues continue to brew in Ireland and Spain. The Japanese Yen found resistance after an overnight surge on speculation the Bank of Japan may intervene.

November Crude Oil made a surprise turnaround to the upside and is now challenging a major 50% price level at 77.70 after inventories surprisingly fell. December Gold pushed higher in limited action. The lack of a major seller is helping to boost prices. Talk of additional quantitative easing and sovereign debt issues in the Euro Zone continue to create fear and concern which is helping to underpin the precious metals.

 

Back to homepage

Leave a comment

Leave a comment