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Market Recap – S&P500 crosses 3000

Friday, July 12, 2019 10:50 AM GMT

On the one hand, is the basic low frequency tone. The FED is already decreasing the pace of its balance sheet reduction and is set to stop the operation completely by September 2019. The FED is recognizing that weak inflation may be more persistent and is ready to act. Bond yields are dropping and capital is invested in equities. On the other hand, is the daily Macroeconomic, higher frequency, releases that continue being strong. Both the latest Non-Farm Payrolls were way above the last 6 months average and the latest inflation reading increased significantly with core CPI m/m recording 0.3%, the largest monthly increase since January 2018. It seems that Jerome Powell is doing a great job, neither being behind nor in front of the curve, and we are set to experience a 12th year of growth.

OPEC’s monthly report on oil had no downward revision of global oil demand growth, that continues standing at 1.14mb/d (million barrels per day). With the exception of the downward revision of the GDP growth of Brazil, the expectations for global GDP growth remained unchanged.

Macro releases: An unexpected worth noting yesterday’s release, has been the shrinking GDP growth of Singapore. Singapore is now reporting an anemic y/y growth of 0.1%. Today the focus turns to the Chinese Trade release and the European industrial production. Both the USD denominated Chinese Trade and the EU industrial activity are expected higher, and could potentially support the risk-on sentiment of the last three days.

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