2:00 PM PT: Worldwide stimulus pushes equities higher.
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Asian markets jumped on two key announcements. The Bank of Japan raised stimulus, but more importantly, the Japan Government Pension Investment Fund (the world’s largest) doubled its allocation to both domestic (Japan) and global stocks, a move that will add hundreds of billions to world equity markets. The Nikkei was up 4.83% and the rest of the world’s markets followed.
In Europe, economic data continues to disappoint. Eurozone CPI was in line with expectation, but German September retail sales fell at the fastest pace in 7-1/3 years. Nothing else seemed to matter though as European markets reacted to the moves in Japan and rising hopes for stimulus from the ECB.
Early US data this morning was disappointing. Personal Income rose less than expected (+0.1%) and Personal Spending fell (-0.2). PCE prices continued to be uncomfortably quiet (+0.1%). Q3 Employment Cost rose more than expected (+0.7%) and may partially explain the more hawkish tone from the Fed. Chicago PMI was a positive at 66.2, and the final Michigan Sentiment gained on the preliminary to 86.9 for the best reading since 2007.
10-Year Note yields continued to edge higher. The US$ soared while gold and crude sank and all three traded at levels not seen in years. After gapping higher, equity markets traded sideways to finish the month with strong gains.