[Platinum Insights] 5.19.23

Good morning.  

U.S. stock index futures edged higher on Friday on optimism that a deal to avoid a catastrophic U.S. debt default could be reached over the weekend. President Joe Biden has reportedly urged his negotiators to keep following a debt-limit deal after House Speaker Kevin McCarthy indicated both parties may reach an agreement as soon as this weekend. 

However, even if a resolution is reached, the barrage of bond sales by the Treasury Department to meet its obligations in the aftermath of a resolution is expected to drain liquidity from the banking system and push up short-term borrowing rates.  

The S&P 500 enters Friday’s session just below the key 4,200 level, and Bank of America thinks it’s time to ease equity exposure. The S&P 500 has been bumping against the 4,200 mark throughout the year without a meaningful break above. This latest test, according to strategist Hartnett, “would be so ‘on-brand’ for stocks to melt-up into recession, suck ’em all in right before the hard landing.”  

WTI crude futures steadied above $72 per barrel. Gold held its recent decline to around $1,960 an ounce while the yield on the US 10-year Treasury note topped 3.6%.  

On the monetary policy front, two US Fed officials said on Thursday that US inflation does not look like it is cooling fast enough to allow the central bank to pause its interest rate hikes.  

In regular trading on Thursday, the S&P 500 climbed 0.94% and the Nasdaq Composite jumped 1.21%, with both benchmarks hitting their highest levels since August, while the Dow rose 0.34%.  

The Nasdaq and S&P price action is now above their recent trading ranges with the DJIA still trading within its range. For more on swing trading, check out our resources on the Platinum Channel.  

Have a great day!  

This information is for educational purposes and is not a recommendation to buy or sell a security