Stock Indices at all time highs…
by John Thorpe, Senior Broker
Where did the volatility go? Are the market prices of stock indices and interest rates now more data dependent than ever?
I was reading a financial services Blog on Friday ,You may have read from Reuters, the WSJ, Bloomberg or other financial media outlets on Friday , the Fed published it’s semi-annual MPR or Monetary Policy Report in which the Fed warned of possible Financial sector risks. I wondered if this new data would impact the price of the stock indices we trade and if so how. With the VIX at pre-pandemic price levels, near lifetime lows, 13.62 as of this writing, what new data will create volatility this week, if any?
For Data this week we have several potentially impactful events. ISM tomorrow would not be one of them.
Wednesday @ 9:00 A.M. CST, the Honorable Jerome Powell will be giving congressional testimony on exactly that topic, the semi-annual MPR. I found an interesting paper for those who like to read and research the stock market reactions to testimony; here is a link to the PDF Cleve Fed White paper on the affect of FED Chair MPR testimony on Stock and Bond prices If you want the short version, Stock indices have historically been more volatile on Day 1 of any MPR testimony.. I’ve provided you with the link to the House Financial Services committee so you can watch live on Wednesday. https://financialservices.house.gov/
Day 2 testimony on the Senate Floor, according to the research, has far less of an impact on stock index prices.
As for another Data point this week, Look for Friday’s pre market, Monthly Non Farm Payrolls to “stir the drink” , especially if we see a surprise from current expectations. Here is the consensus from Econoday.com
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