Still, a rough week for bonds calmed down a bit on Thursday after news that U.S. first quarter GDP and inflation readings were revised down a touch, home sales plunged in April and jobless claims ticked higher.
The latest sweep of Fed speakers also sounded more sanguine about the hopes for continued disinflation.
Without signalling any urgency in cutting rates, New York Fed boss John Williams said rates would be cut “at some point”. Dallas Fed chief Lorie Logan reiterated that it was still “too soon” to be thinking about easing.
However, the better bond market mood did little to lift stocks. The S&P500 lost 0.6% on Thursday and, dragged down by a near 20% post-earnings swoon in Salesforce shares, the Nasdaq lost more than 1%.
Futures stayed in the red before Friday’s bell and the VIX volatility index stayed elevated at about 14.5.
There was no obvious market reaction to the potentially seismic political news overnight that Donald Trump became the first U.S. president to be convicted of a crime. A New York jury found him guilty of falsifying documents to cover up a payment to silence a porn star ahead of the 2016 election.
Although polling shows most voters see the conviction as ‘serious’, markets seem wary of reading any implications for November’s presidential election race – not least because they have yet to fix on what a Trump return to the White House would mean for asset markets and economy anyhow.
And much has yet to play out in terms of sentencing, appeals and what it means for Trump’s candidacy within the Republican party. Even in the unlikely event he faced prison, he would still not be constitutionally barred from becoming president.
