US Stocks Drop on Rate Hike Fears – Nasdaq Down 0.6%
Investor focus moved back to the Fed overnight as well as the pending debt ceiling vote in Congress and US stock markets suffered as a result, the Dow closed down 0.41%, the S&P 0.61% and the Nasdaq finished negative 0.63%. Currencies experienced another wild and whippy day as the dollar appreciated strongly before snapping back later in the day. Treasury yields in the US dropped off as the first of three major job numbers updates this week indicated that the market remains tight, and job openings surged to 10.1 million – the benchmark US 10-year trading down 6.7 basis points to 3.629%.
Debt Deal Jumps First Hurdle
The much-discussed US debt deal has passed its first test today in Congress as both parties joined to approve the bill. Investors have largely been pricing in this result but the confirmation out of Washington will give that added reassurance to markets. The deal now heads to the Senate where approval is virtually certain with the only minor concern now that everything is wrapped up by the June 5 deadline. Stock markets in Asia have taken on a bid tone on the back of the news but already the debt deal is fast becoming yesterday’s news as Fed concerns once again look set to take pole position for investors.
Data in Focus for Traders Today
Investors are already starting to put concerns about the US debt situation in the rear mirror as a plethora of macroeconomic data releases come into focus today. The Asian session has mainly tier 3 data due for release but things should start to get more interesting on the European open. There is a whole host of Manufacturing PMI numbers due out in Europe but the main event will be the latest CPI Flash estimate for the continent, with expectation sitting at 6.3% y/y. The US session is set to be a busy one again with the ADP Non-Farm Employment numbers due at the same time as the weekly unemployment claims data, these are then followed later in the day with the ISM Manufacturing PMI numbers being released – the market expectation is for a 47.0 print.
