The Day Ahead: Dollar Off Lows,Stocks Weaker Before Fed Speakers, Auctions
Investors look hesitant to keep the rally going. The S&P 500 has climbed 5.5% on six straight days of gains and the Dow hit a 13-month yesterday at 10,226, but Tuesday’s future market shows both markets retrenching. Meanwhile, stocks in Asia and Europe are all modestly higher.
Though Tuesday offers no major economic data, there’s plenty going on markets to keep headlines active and investors busy. Just yesterday the US dollar fell to a 15-month low and gold topped the $1,100 mark to hit a new record high.
Even so, analysts from TD Securities suggest the dollar may be overvalued by as much as 20%. “Our model outputs support our call for further, medium term weakness in the USD,” analysts wrote in the TD U.S. Dollar Monitor report. “We expect EUR/USD to reach USD1.55 by mid 2010.”
In unrelated news, HFE’s Ian Shepherdson argues that the $8,000 tax credit for homebuyers, which was extended into March last week, is regressive.
“For the record, the homeowner tax credit is bad economic policy ― subsidies are inefficient and distort markets ― and it is bad social policy too, because the tax credit is partly funded by non-homeowners . . . The money would have been far better spent on renewing the nation’s infrastructure, which surely needs it.”
Key Events Today:
The weekly retail reports hit markets at 7:45am and 9:55am, but no major data is set for release. Also, the Senate Budget Committee will hold a bipartisan hearing on ideas to cut the deficit.
9:15 ― Dennis Lockhart, president of the Atlanta Federal Reserve, speaks at the Urban Land Institute conference in Atlanta.
10:00 ― Janet Yellen, president of the San Francisco Federal Reserve, gives her outlook on the economy and the housing market to Lambda Alpha International in Phoenix.
7:30pm ― Richard Fisher, president of the Dallas Federal Reserve, gives his economic outlook to the Austin Headliners Club in Austin.
- Treasury Auctions:
- 1:00 ― 10-Year Notes
- 1:00 ― 4-Week Notes