S&P 500: Wall Street futures, bonds and the dollar on the rise

• Wall Street futures ground positive.
• Forex market does not reflect the risk appetite seen in US stocks.
• Activity returns to normal after the holidays.

Wall Street futures are rising, with advances close to 0.40%. Among currencies, optimism is lacking as the dollar is steadily advancing and Treasuries retreating. Metals and oil fall after setting new highs in months.

Stocks go up but…

In Asia markets closed higher with the Hang Seng rising 1.85% and the Shanghai Stock Index 0.88%. Japan did not operate because it was a holiday. In Europe, the FTSE 100 advances 1.42% (in part driven by the fall in the pound), the DAX gains 0.64% and the CAC 40 rises 0.50%. Wall Street futures have pared gains in recent hours. ANDn the previous one the S&P 500 rises 0.31%, after having been up almost 1%; those of the Nasdaq climb 0.39% and those of the Dow Jones 0.32%.

The economic calendar appears loaded in the US, especially as of Wednesday. The final reading of the S&P Global Manufacturing PMI will be released on Tuesday. The ISM and the minutes of the last Federal Reserve meeting will arrive on Wednesday. On Thursday the ADP for private employment and on Friday the official employment report with the non-farm payroll figures for December and the unemployment rate.

The upcoming US data and minutes have great potential to move monetary policy expectations. These days the final rate of the cycle of interest rate rises is being debated.

The director of the International Monetary Fund, Kristalina Georgieva warned that this year a third of the world economy will be in recession and that 2023 will be worse than 2022. In the United Kingdom the railway strike began, which will last for five days.

It was known that in China, factory activity in China contracted at a stronger pace in December due to complications from COVID infections. The country has already removed most of the restrictions and a rebound is expected in the coming months. The Caixin Manufacturing PMI dipped from 49.4 to 49 in December, the lowest reading since September and the fifth below 50, although it beat expectations for a reading of 48.8.

In Germany The retail inflation data for December will be released, which is expected to show a drop in the annual rate from 10% to 9%. Regional data that has already been released showed a general decline of between 1.2 and 1.7 percentage points from the November readings. In another report, it was learned that the unemployment rate in Germany went from 5.6% to 5.5% in December, in line with expectations.

The Treasury bond they resumed activity with increases. The 10-year tranche yields 3.76%, far from the 3.90% at the end of the year. For its part, the two-year is at 4.36%, far from 4.44% days ago. The Treasury will place debt at 13 weeks (54,000 million) and 26 weeks (45,000 million) on Tuesday. Inflation data from Germany boosted demand for European sovereign bonds, where yields are also falling.

Despite the drop in yields and the rise in equity markets, the dollar is firm in the market, which may indicate some caution in equity markets. The divergence in the traditional correlation could be resolved with either a pullback in the dollar or a negative reversal on Wall Street.

The DXY climbs 1.25%, having the best day in weeks. EUR/USD is below 1.0530, while GBP/USD is testing 1.1900. AUD/USD fell below 0.6700 while USD/JPY is positive for the day after a strong rebound from 7-month lows and is back above 131.00. Emerging currencies move with modest losses against the dollar.

The metals They hit monthly highs in the European session, with gold above $1,850 and silver above $24.50, but then pared gains and trade at $1,832 and $24.25 respectively. Something similar happened with oil, which wiped out the gains. The WTI barrel it reached multi-day highs in the $81.30 area before falling to $79.00. This week the Organization of the Petroleum Exporting Countries will meet.

The cryptocurrencies mixed trades on Tuesday, preserving the rebound of days ago. Bitcoin is located around $16,700 while Ethereum falls 0.55%, holding on to $1,200.

technical levels