[Platinum Insights] (6.29.23)

Good morning. 

The S&P 500 and Dow closed lower on Wednesday after Fed Chair Jerome Powell said he did not see inflation falling to the central bank’s target rate “this year or next year” and that most of the policymakers expect the central bank will need to raise interest rates at least twice more by year’s end. 

U.S. stock index futures edged higher this morning as most banking stocks rose after clearing the Federal Reserve’s annual stress test, while megcap stocks looked to extend gains despite the prospect of further interest rate hikes.  

Investors are awaiting fresh data including the final reading of first-quarter U.S. GDP and weekly jobless claims for clues on the outlook for rates. The Personal Consumption Expenditure index (PCE), the Fed’s preferred inflation gauge, for May will be released on Friday. Economists polled by Reuters expect core rates to remain steady at 4.7% 

WTI crude futures are trading around $70 per barrel. Gold held below $1,910 an ounce while the yield on the US 10-year Treasury note hovered around 3.7%. 

Tomorrow is the final trading day for the month and the 2nd quarter. We can expect a certain amount of window dressing to occur at the end of a quarter. Window dressing refers to the practice employed by fund managers and portfolio managers to make their portfolios appear more attractive or in line with certain benchmarks during specific reporting periods, such as the end of a quarter or fiscal year. It involves making strategic adjustments to the holdings or composition of the portfolio to enhance its appearance. 

When fund managers engage in window dressing by buying specific stocks or sectors, it can create additional demand for those securities. This increased buying pressure may drive up the prices of those stocks, at least temporarily. Conversely, selling pressure on underperforming stocks during window dressing can contribute to their price decline. 

Have a great day