City A.M. TV: Daily Market Snapshot (video)
Various markets are starting to break out to new highs across the globe. The Dax in Europe, for example, the small and mid-cap indices in the US, as well as many of the cyclical areas of global markets, have all been making new highs over the course of this week.
In the UK, the large cap FTSE100 has been rangebound this year, whilst the mid-caps (FTSE250) are on the verge of breaking out to the upside. Most critically for global markets, the main US equity index, the S&P500, has retraced all of its recent losses and is sitting at its record intraday highs from mid-February.
Whether or not it breaks above those levels is critical. Part of the answer to that puzzle is likely to lie in the behaviour of bond yields over the next week or two. Equally the message of our short term 1 – 2 week market timing models is also key.
Key events today include the Michigan consumer sentiment data published 3pm London time. The US will also publish its latest producer price inflation data (1:30pm London time). Given the current focus on bonds and debate about the outlook for inflation, that data will be watched closely. As highlighted above, the price action of bonds is also important, with 1.60 per cent a major yield level for US 10 year bonds.