Monday's Close

E-mini S&P 500 Futures (September): Settled at 4475.50, up 38.50

E-mini Nasdaq-100 Futures (September): Settled at 15,304.50, up 217.75

The S&P and Nasdaq melted higher yesterday to settle at fresh records. In fact, each 30-minute bar for both was higher than the last with very little volatility, beginning with the opening bell surge through noon CT. Those gains were extended overnight with a spike into the European open, but price action has since slipped back near settlement ahead of the U.S. session. 

News of no new Covid-19 cases in China yesterday, followed by supportive rhetoric from officials, has certainly been a tailwind to start the week. However, it’s the expectation of dovish comments from U.S. Federal Reserve officials at this week’s Jackson Hole that’s truly underpinning the entire risk landscape. 

Goldman Sachs has pushed out their expectation for a taper announcement to November or potentially December due to Delta variant uncertainties. As we discussed here yesterday, we find such expectations extremely ironic in the face of China beating this wave of the virus in 30 days. Furthermore, Europe and the UK proved the same feat is doable through July. 

It simply seems misguided for the Federal Reserve to not capitalize on the current conditions— stocks at record highs and a 10-year yield at 1.26%— in order to stimulate the economy just a little bit less.

Today’s economic calendar brings New Home Sales at 9:00 a.m. CT along with Richmond Fed Manufacturing. The Treasury will begin a trio of auctions today with the 2-Year Note, followed by the 5-Year tomorrow and 7-Year Thursday.

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