S&P 500: Resilient as Fed tone turns dovish – Deutsche Bank

Deutsche Bank’s Early Morning Reid team reports that the S&P 500 broke a three-day losing streak, helped by a pullback in US Treasury yields and more dovish FOMC commentary. Despite strong US data and earlier upward pressure on yields, markets now price a much lower probability of an October Fed hike, supporting US equities into the upcoming jobs report.

Equities supported by lower hike odds

"Whilst European assets struggled yesterday, there was a very different tone in the US."

"Moreover, US equities recovered from their earlier sell-off, with the S&P 500 (+0.19%) ending a run of three consecutive declines, whilst futures for the index are up another +0.27% this morning."

"That left an October Fed hike just 30% priced by yesterday’s close, down from 37% on Wednesday and 70% on Monday before NY Fed President Williams similarly signalled no urgency for the next hike."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)