DBS Group analysts note that in America, the record high stock market is struggling with expectations over the pace of the Fed’s asset purchases program.
They begin by noting that in terms of the Fed’s dual mandate, those arguing for tapering purchases are looking at better jobs data, while those looking at increasing purchases are warning about lower inflation. They write, “That’s how will be looking at tonight’s S&P/Case Shiller home data and the consumer confidence data tonight.” They add that the more important number will be the core PCE deflator this Friday and next week’s nonfarm payrolls data. Nonetheless, equity bulls attributed the rally to the Fed’s generous liquidity punch bowl, which in turn, supported the US dollar. In this regard, they feel that market participants will need to decide if better data is good or bad for the investment environment, and that’s probably the debate that will continue into the next FOMC meeting set on June 19, immediately after the G8 Summit. – FXstreet.com (Barcelona)