Free to Watch    Free to Join    Free to Learn

Join Now
Markets climb as investors watch US healthcare bill

by Wealth Know How in Commentary & Opinion

US and global stocks are trading at record highs as markets continue to climb a wall of worry.   This is still an unloved rally.
 
Markets now will be keeping a close eye on the US Senate to see whether it passes the new US healthcare bill.
 
Getting this bill through the senate is a test case for the Trump administration. If the Republicans are successful in winding back Obamacare, they will have a greater chance of getting their next major initiative – tax reform – passed.
 
As for rates in the US, expectations for when the next  rate rise will occur have changed significantly following comments by US Federal Reserve Chair, Janet Yellen, along with weaker-than-expected inflation figures.   The market now only has a 40% chance of a rate hike in September.
 
That said, the Fed cannot ignore the strength of the US labour market which is stronger than when they first lifted rates in 2015.
 
A continuing series of strong employment reports in the US could quickly change the markets expectation for a rate hike. This occurred in 1994 to1995 when the Fed began raising rates in a mild inflationary environment due to strong labour market conditions.
 
The change in expectations for US rates has helped the Australian Dollar which has risen to above $0.79 unexpectedly.  It has also received help from a surge in the Canadian dollar and renewed optimism in global growth – especially from China.
 
China’s, second quarter GDP didn’t disappoint – growth is still stronger than market expectations.
 
Also, we should look at China's export growth which has accelerated recently. These figures help to confirm the global growth story.
 
A final word on oil.
 
Prices are being helped by expectations that growing demand could help reduce a global oil glut by the second half of the year. The wild card for the price of oil is shale oil production in the US.
 

Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.

Published on 19 Jul 17

  • US and global stocks are trading at record highs as markets continue to climb a wall of worry.   This is still an unloved rally.
     
    Markets now will be keeping a close eye on the US Senate to see whether it passes the new US healthcare bill.
     
    Getting this bill through the senate is a test case for the Trump administration. If the Republicans are successful in winding back Obamacare, they will have a greater chance of getting their next major initiative – tax reform – passed.
     
    As for rates in the US, expectations for when the next  rate rise will occur have changed significantly following comments by US Federal Reserve Chair, Janet Yellen, along with weaker-than-expected inflation figures.   The market now only has a 40% chance of a rate hike in September.
     
    That said, the Fed cannot ignore the strength of the US labour market which is stronger than when they first lifted rates in 2015.
     
    A continuing series of strong employment reports in the US could quickly change the markets expectation for a rate hike. This occurred in 1994 to1995 when the Fed began raising rates in a mild inflationary environment due to strong labour market conditions.
     
    The change in expectations for US rates has helped the Australian Dollar which has risen to above $0.79 unexpectedly.  It has also received help from a surge in the Canadian dollar and renewed optimism in global growth – especially from China.
     
    China’s, second quarter GDP didn’t disappoint – growth is still stronger than market expectations.
     
    Also, we should look at China's export growth which has accelerated recently. These figures help to confirm the global growth story.
     
    A final word on oil.
     
    Prices are being helped by expectations that growing demand could help reduce a global oil glut by the second half of the year. The wild card for the price of oil is shale oil production in the US.
     

    Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.

View our library of videos

Join Now

View our library of videos

Join Now