Global markets were seen approaching or crossing key thresholds this week. At Wednesday’s post rate decision press conference, Fed Chair Yellen said conditions were still not ripe for starting rate hikes, citing continued labor market slack and weakness in wages. Fed dovishness help propel stocks higher and the Nasdaq closed at a new all-time high of 5,143 on Thursday, finally topping the all-time high set on March 10th, 2000 at the height of the dot com bubble. Greece and its creditors remained at an impasse, failing to bring any new ideas to a meeting of European financial ministers on Thursday. An emergency summit of euro zone leaders on Monday appears to be the last chance to change the course of events flowing toward a Greek default. In Asia, both the Shanghai and Shenzhen stock markets fell into correction territory, as liquidity concerns pummeled the markets after regulators again scolded brokers about excessive margin trading. Even as China sank, US stocks had their best week in two months: the DJIA added 0.6%, the S&P500 rose 0.7%, and the Nasdaq gained 1.3%.

The Fed statement on Wednesday was updated to acknowledge economic activity has expanded moderately, the pace of job gains picked up, underutilization of labor resources diminished, moderate spending growth, and stabilization in energy prices. But on the key issue, there was no change: inflation continued to run below target. In March, the dot chart gave a sense that the Fed would tighten by at least 50 bps in 2015 and quite possibly more. The updated projections showed more members were now anticipating only one 25 bps hike this year, though some still see one or two in addition to that. Chair Yellen explained that conditions have not yet been met for a rate hike, and urged Fed watchers to focus more on the shape of the rate policy cycle than on when rate liftoff occurs. After the policy statement, Goldman Sachs said it now believes the Fed will wait until December to raise interest rates, pushing back its forecast for rate liftoff by three months.

Pessimism regarding the final act of the Greece bailout drama waxed and waned this week, with passing headlines about possible imminent deals outweighed by more material statements from officials on both sides that the game was just about over. June 30th is the unavoidable deadline, and IMF Chief Lagarde warned that the payment due at that time was definitive and there would be no grace period or possibility of delay, while Greek officials confirmed there was no money in the till to make the payment. After no progress was made at the Eurogroup meeting on Thursday, a summit of euro zone leaders was hastily arranged for next Monday to give Athens one last chance to submit concrete concessions. As much as €3.2 billion leaked out of the Greek banking system this week, shrinking total deposits to around €125 billion, even as the ECB doled out two ELA hikes to prop up Greece’s financial system through Monday.

Continue reading “Market Recap & Futures Levels 6.23.2015”