Awaiting cues from Earnings and FOMC Awaiting cues from Earnings and FOMC Awaiting cues from Earnings and FOMC

Awaiting cues from Earnings and FOMC

Equities 5 minutes to read

Summary:  An FOMC preview and other comments

A humdrum session in Asia as markets brace for a busy week ahead, awaiting cues from the FOMC and a spate of big tech earnings. Solid earnings from these companies could breathe fresh momentum into markets and provide a catalyst for tech stocks to move higher alongside reopening/reflation trades. Copper a standout continuing to climb higher as structural deficits and concerns re top exporter Chile collide with a vaccine led recovery and increased demand for copper in green spending, smart electricity grid building, EVs/charging stations and wind turbines. Momentum is strong, it’s only a matter of time before copper hits US$10,000/ton.

Commodity markets continue to send inflationary signals and despite the clear inflation across the commodity complex and a strengthening US recovery that is longer just a forecast, but a clear reality the Fed will likely play down inflation and continue to point to transitory inflationary pressures. A trend that is clearly not transpiring in the real world as momentum continues to build across a suite of inflationary reads – for more see our inflation watch update.

Powell has clearly conveyed that policy makers are in no rush to withdraw their accommodative stance and under the guise of average inflation targeting this new policy regime will see the Fed on the sidelines for quite some time. This is a new framework, with a social justice overlay – U6 is the new U3.

With no change expected to their stance or bond purchase programme expected this week Powell is likely to reiterate the FOMC’s commitment to keeping policy unchanged at present. Given the improvement in the US economy, labour market and vaccination schedule juxtaposed with an ultra-loose Fed shying away from premature policy withdrawal, the meeting may be a non-event in the sense of offering up any new information. Whilst the statement may recognize the improved US economy, there is unlikely to be much in the way of fresh signal value with respect to tapering and eventually tightening. Recently Bullard, president of the St. Louis Fed said that reaching the hurdle where 75% of Americans have been vaccinated would be a signal that the pandemic was ending, and a potential cue for the Fed to consider tapering its bond-buying program. This signalling will evolve alongside the trajectory of the recovery but given the Feds outspoken guidance on meeting a 'substantial further progress' threshold, taper talk is unlikely to transpire until later this year. Although for markets, fresh drivers for expectations on the timing of tapering/the Fed’s next tightening cycle are likely to be found in coming months as economic data collides with extremely favourable base effects and rebounding demand.

With the Fed remaining tight lipped on tapering the read through for FX is likely limited. Although with the move higher in long dated yields in the US having consolidated of late, the apathetic stance on strengthening inflation alongside acknowledging the continued acceleration in the US recovery could send yields higher. The market sees inflation pressures and raises Powell one. It may be the more dovish Powell sounds on allowing inflation to overshoot and maintaining a patient stance with respect to policy settings the higher long end rates go as inflation expectations follow.

For equities, financial conditions are supportive, and the latest global economic data continues to show the economic cycle is accelerating with reflation in play. Granted favourable base effects are playing their part in the year over year acceleration in the data (and will continue to do so). To date S&P 500 earnings releases (132/500) are beating consensus estimates at a record setting rate, though with the high-profile tech juggernauts yet to report. All told the economic cycle continues to accelerate which remains the driving force propelling equity markets and underpinning a continued earnings recovery in the near term.

However, focus is slowly beginning shift to the impact of rising input costs, margin pressures and the prospect taxes hikes – likely a more difficult period to navigate is approaching in 2H.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.