Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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NY Open: Wall Street rallies on earnings
Michael O’Neill
FX Trader, Loonieviews.net
Summary: US markets were boosted by Apple and Boeing, but the Fed, Microsoft and Facebook still loom.
Wall Street rallied at the open thanks to Apple (AAPL: Nasdaq) and Boeing (BA: NYSE) results. Apple reported earnings after the market closed yesterday, and the results showed that there is more to Apple than an iPhone. CEO Tim Cook said the quarter’s results “demonstrated the underlying strength of [Apple's] business units” which helped lift earnings-per-share to a record $4.18.
Markets liked the news, and Apple shares jumped 4.43% in early trading.
Walls Street got an added lift when Boeing (BA: NYSE) results were better than forecasts. BA reported Q4 earnings of $5.48/share and earned a record $101.1 billion in revenue. Traders are hoping for similar positive outcomes from Microsoft (MSFT: Nasdaq), and Facebook (FB: Nasdaq) after the close of business today.
Financial markets are looking to Federal Reserve chair Jerome Powell to do his part to keep the party going. The Fed is widely expected to deliver a somewhat dovish policy statement today, emphasising “caution” and “flexibility.” The concern is whether Powell sticks to the script during his press conference and avoids a repeat of the market carnage following the December 21 meeting.
The US dollar has climbed against all the G10 majors since the New York open. This morning’s better than expected ADP employment change data (Actual 213,000 versus a forecasted 178,000) suggests there could be some upside risk to Friday’s nonfarm payrolls, where forecasts call for a gain of 166,000 jobs.
The US dollar strength may be partly driven by trimming of positions ahead of this afternoon's FOMC statement. USDCAD is the only losing currency pair, falling from 1.3235 to 1.3207, undermined by the jump in WTI oil prices to $54.00/barrel.
For those interested in US economic data:
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