World stocks and commodities rose on Monday, boosted by upbeat Chinese data, while U.S. oil futures jumped to a near six-month high as escalating tensions between the Iraqi government and Kurdish forces threatened supply. Global markets digested the large amount of weekend newsflow, and clearly liked what they saw as S&P futures were modestly in the green, as both European and Asian stocks are higher.
For the first day in three S&P futures have pulled back modestly from record levels as some investors cautioned that gains had gone too far, too fast, European shares are mixed while Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong. The dollar ended a two-day advance as TSY yields dropped in what has become a close correlation trade (see below) while oil and gold rose, perhaps in response to the ongoing plunge in bitcoin.
S&P futures were fractionally higher (+0.1% to 2,476) with all eyes on the Fed's rate decision as investors await another earnings deluge from companies including Facebook, Coca-Cola and Boeing. Asian and European shares were also higher, prompted by momentum from the latest US record high; the Dollar rebound continued while oil rose above $48 as copper hit a two year high.
The relentless risk levitation continued overnight, as global shares extended their stretch of consecutive record highs on Thursday for a 10th day after a cautious BOJ lifted Asian stocks to a decade high with a dovish announcement that offered no surprises, while pushing back Kuroda's 2% inflation target to 2020, the 6th consecutive delay. With all eyes on the ECB in just over an hour, US equity futures are in the green, following solid gains around the globe. European stocks extended their biggest gain in a week while Asian equities maintained their rally.
While stocks appear to have regained their footing this morning, not to mention upward momentum, the big quandary in markets remain not stocks but bonds, which refuse to validate a stronger growth narrative just one day before the Fed is set to hike rates for the second time this year. In fact, despite a recent record short squeeze in rates, with net specs recently turning bullish on the TSY complex...
... bond bears just can't seem to catch a break as yields continue to drift ever lower while the yield curve pancakes.