E-mini S&P 500 Futures (December): Settled at 3406.75, up 53.50
E-mini Nasdaq-100 Futures (December): Settled at 11,470, up 196.25
U.S. benchmarks are continuing yesterday’s strength in a snapback from Tuesday’s selling. The wave of weakness followed President Trump’s tweets on fiscal policy negotiations. In fact, it was his follow up tweet late Tuesday night, that we pointed to here yesterday, where he emphasized his willingness to pass a stand-alone bill for $1,200 stimulus checks to individuals that reinvigorated strength across risk-assets. That strength has continued to carry the tape higher and ultimately the market realizes a Covid-19 aid package is coming.
No surprise, yesterday’s FOMC Minutes reiterated the need for fiscal measures. The market finished strongly after the release as it echoes its anticipation of support. Whether piece by piece or one bill, before the election or after, support is coming.
Yesterday, New York Fed President John Williams took a less dovish and arguably hawkish approach. He said that although the economic outlook is still uncertain and the recovery is not where it needs to be the Fed is already very accommodative, buying bonds at “extremely high levels.” Quietly, those comments are a shot at Congress for help. He added that the committee will not accept “persistently high inflation." The market isn't worried the Fed will take away the Kool-Aid anytime soon (and expects additional stimulus from Congress), however, we expect these types of narratives to come to a headwind in the first quarter. Not because the Fed will raise rates in 2021, but because the timeline from 2023 will likely be bumped up.
Weekly Jobless Claims were solid this morning. Initial claims were a touch above expectations at 840,000 whereas continuing claims set a new post-pandemic low. There is a 30-year U.S. Treasury auction at noon CT.
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