Daily Market Color January 19, 2024Equities Reach New Highs Equities surpass all-time highs while Treasury markets look ahead to PCE. The S&P 500 and Nasdaq 100 closed at record highs today, as the “Magnificent Seven” and the broader technology sector benefitted from a risk-on pivot. The S&P 500 rose 1.23% and the Nasdaq 100 nearly 2%, now at over $4,840 and $17,300, respectively. Meanwhile, the yield curve flattened as short-term rates climbed ~3bps and long-term rates dropped ~3bps ahead of next week’s inflation data. Rates rose 20-25bps this week, the yield curve now trading above 4% across all tenors. US consumer sentiment reaches multi-year high. University of Michigan consumer sentiment data for January rose 13% from last month, the largest monthly climb since 2005 and its highest level since July 2021. Over the last two months, sentiment has climbed 29%, the largest two-month increase since 1991. One-year inflation expectations also posted a second-straight monthly decline to 2.9%, the lowest since December 2020. Optimistic views on the economy, inflation, and household income growth helped drive the positive results. Fed President Daly says it is “premature” to expect rate-cuts soon. San Francisco Fed President Daly made it clear today that she thinks it is “premature to think that [rate cuts are] around the corner.” She added, “Do I get consistent evidence that inflation is coming down, or do I get any early signs with the labor market starting to falter? Neither one of those right now is pushing me to think that an adjustment is necessary.” Her comments follow similar pushback against early-year cuts from Fed President Bostic and Fed Governor Waller this week.
