Daily Market Color

Equity Markets Lead Positive Market Tone

US and European stocks are in positive territory today, as solid corporate earnings help to propel equity gains. Bullish US economic data and corporate earnings reflect a stable investment sentiment in the global markets, even in the aftermath of the UK’s disruptive Brexit vote. Today, Microsoft Corp’s strong market gain along with Morgan Stanley’s earnings results, headlined US stocks positive action. The Dow Jones is heading to its 9th consecutive winning day as it trades up 0.25%.

From a low of a 9% chance for another Fed rate increase this year predicted in June to now a 44% chance per Bloomberg data, speculation of the Federal Reserve raising interest rates again after recent strong economic data has been helping push US Treasury bond yields up, while also strengthening the US dollar.

The 10Y US Treasury yield rose 3 basis points to 1.59% this morning, now back up nearly 30 basis points from an all-time low closing yield set earlier this month at 1.318%. The German 10-year Bund remains mostly unchanged and still sits in negative yield territory.

Following the lead of Bank of America and Goldman Sachs,  US banks quarterly earnings continue to beat analyst expectations. Morgan Stanley announced earnings which exceeded estimates of Bloomberg survey analysts by 25%, who had been calling for earnings of 60 cents. Revenue in fixed income and equity trading led the way, also helped by Morgan Stanley’s action to make cuts in compensation.

The US Dollar is up against most major currencies, while Ag and Metal prices are mostly lower and Energy prices are up around 1% on the day.

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