Larry Summers withdrew his name from the Federal Reserve Chairman pool on Sunday afternoon New York time. Classic risk-on price action has ensued in the overnight session.
- Larry Summers Won’t be Fed Chairman. After months of speculation that Larry Summers was the most likely choice for the head of the Fed, he’s now out of the running. Whether correctly or not, financial markets had viewed him as the more hawkish candidate, so equity markets are higher, Treasuries are higher, and the dollar is lower following the announcement.
- SPX Futures Hit New All-Time High – Sept SPX futures hit a new all-time high shortly after the 6:00 pm EDT Sunday open. 1710.50 was the overnight high, surpassing the 1705 high from early August. European equities also hit a new 2 year high as measured by the Euro Stoxx 50 index.
- Asian Equities Led by Southeast Asia – The emerging market countries that were the weakest this summer were those that bounced the most overnight. Asian markets were mostly green (with the exception of China and India), with the strongest gains seen in Indonesia, Thailand, and the Philippines, all up more than 2%. Hong Kong also hit a new 3 month high, and Australia hit a new 5 year high.
- Dollar Lower, Bonds Higher, Commodities Mixed – The U.S. dollar hit a new multi-month low vs. the British pound, Aussie Dollar, and the New Zealand dollar. Once again, many of the hardest-hit emerging market currencies were the biggest gainers, including the Turkish lira and Indian rupee. The 10 Year Treasury Yield hit its lowest level in September (though only unchanged on the month). Commodities were more mixed, with precious metals and copper higher, but oil and grains lower.
- The U.S. and Russia Draft Accord for Syria – Both countries are now on the diplomatic circuit to build support for the plan to eliminate Syria’s chemical weapons. Secretary of State John Kerry kept the possibility for future military action on the table, but markets are gradually putting more weight on a peaceful resolution. Crude oil opened down 1% in the overnight session, but has rallied in the past hour, so it is only down 0.25%. 50 day moving average for front month WTI oil is 106.58. Overnight low was 106.76.