- As investors greeted lower-than-expected inflation data in the US and the UK as proof that central banks could be done raising interest rates aggressively, stocks continued to rise.
- Pre-market trading saw a 14% increase in Target as profits exceeded forecasts due to lower discounting and improved inventory control. Futures on the S&P 500 increased by 0.4%, while those on the Nasdaq 100 increased by 0.6%. Following the significant decline in the dollar the day before, Treasuries stabilised.
- The US retail sales and producer prices statistics on Wednesday are expected to provide additional evidence to the market that the Federal Reserve can ease its monetary policy tightening in the event of an economic slowdown. Fed swaps show that there is virtually no chance of another raise, with the market pricing in a 50 basis-point rate reduction by July.
- "There's a sense of relief that this major headwind to market appreciation is being removed if the Fed is done hiking interest rates," stated Matt Stucky, chief equities portfolio manager at Northwestern Mutual Wealth Management.
- "But if future data—like retail sales—only point to a slowdown in the economy", he continued, "we're likely to see that the Fed continues to be on pause."
