In a week of wild, scenic railway type undulations, Wall Street ended the week rattling higher — although who knows what’s around the next bend.
The three key indices all made solid gains just before the end of trade; the S&P 500 rose 1.8%, while the Dow and Nasdaq both gained 1.6% over the session.
Remarkably, when everything settled at the close of business, the S&P 500 was up 5.7% over the week.
The ASX gave up just 0.3%, while Eurozone shares were down 1.4% Japan down 0.6% and China 2.9% over the week.
Wall Street sentiment changed mid-session after some comforting words from two Federal Reserve officials.
Boston Federal Reserve President Susan Collins gave assurances that the Fed is prepared to keep financial markets functioning should the need arise, telling London’s Financial Times that “we’re not seeing liquidity concerns” and that “markets are continuing to function well”.
Veteran New York Fed President John Williams was also out and about arguing stagflation — that is the low growth/high inflation quagmire — was currently not a threat, and if it became one, perish the thought, the Fed would step in with a very cunning plan to fix things.
That Fed-speak was all traders needed to plunge back in with their ears pinned back.
The rest of Friday’s news flow failed to provide much clarity.
Consumer inflation expectations took off like a scalded cat, yet producer prices cooled in March.
First quarter reporting season kicked off with the big banks J.P. Morgan, Morgan Stanley and Wells Fargo all producing better than expected profits.
Banks shares rose around 1% across the day.
But it’s the bond market that is driving things, and arguably not in a comforting way.
US Treasury bond yields continued to rise as investors continued to sell out of an asset that seems to be losing its safe haven allure.
Ten-year bond yields registered their biggest weekly rise since 2001.
The speculation is the world’s biggest holder of US Treasuries, China, is selling down its holdings as the Trump administration ratcheted up tariffs on Chinese imports to 145%. Touché.
That sent the US dollar down against most currencies, including for once, the Australian dollar which gained 1.0% and shot past 63 US cents.
Gold was another beneficiary, hitting a new record high mid-session and end 2% higher at $3,267/ounce. Bullion gained 6% over the week
