- Markets close higher.
- The bond market doesn't care about $1 trillion deficits. Here's why.
US stocks closed higher on Tuesday, approaching their record highs.
Market sentiment is helped by expectations that the Federal Reserve will cut interest rates next week and inspire more spending. But whether next week's anticipated rate cut will be quarter-percentage point or half-point cut doesn't really matter, according to Memani.
"What matters is that they're easing, not tightening," he said.
Given the absence of inflation, the central bank has the flexibility to engineer the economic expansion to continue, meaning "the current cycle will last five more years," said Memani. But if inflation resurfaces, things will look differently.
The deal to temporarily remove of debt ceiling "and a little more spending in the near term" is also helping investors stay positive for now, Memani said.
Even though many investors are aware that diversification is key in a well-balanced portfolio, they don't put their money where their mouths are.
According to TD, about two-thirds of investors are aware that they should diversify. But Baby Boomers are more reluctant to invest abroad compared with Millennials.
A lack of information about foreign companies, a perception of instability amid a frenzy of geopolitical headlines and volatility are scaring people off.
The 10-year Treasury yield ticked up to 2.05% on Tuesday, compared with 2.04% the day before. That remains near the lowest levels since President Donald Trump’s election in November 2016.
The budget agreement would raise limits on spending by $321 billion over two years, putting further upward pressure on the budget deficit. The deal could add roughly $1.7 trillion to projected debt levels over the next decade, according to the Committee for a Responsible Federal Budget.
Market analysts say the bond market doesn’t care much about the worsening outlook for the federal budget. Instead, rates are being driven in large part by subdued inflation and central bank policy.
Although investors don’t seem very worried about the US fiscal situation now, that could change eventually.
“We can’t know what the inflection point is,” said Guy LeBas, chief fixed income strategist at Janney Capital Management. He pointed to how investors suddenly became obsessed with Greece’s debt in 2009 – despite the fact that it had been rising for a decade.
“Markets don’t care -- until they suddenly do,” LeBas said.
Hasbro said the live action remake of Disney's Aladdin also helped lift sales. And the company is expecting an even bigger boost around the holidays from Disney franchise toys.
It is gearing up to sell more Elsa, Anna and Olaf toys tied to this November's "Frozen 2" as well as a ton of new Star Wars toys, thanks to the release later this year of the "Fallen Order" video game, "The Mandalorian" TV show that will air on the Disney+ streaming network and, of course, December's "Star Wars: Episode IX: The Rise of Skywalker." So it looks like the Force is strong with Hasbro.
US stocks opened higher on Tuesday amid a flurry of corporate earnings.
Could the value of the pound drop to just one US dollar?
The US economy is slowing, but the country might avoid a recession if it doesn't escalate its trade battles with China, Europe and other nations.
A slew of companies report results Tuesday for the three months ending in June.
The bank beat profit expectations, even as its investment unit continued to struggle. The Swiss bank also warned that lower interest rates on the horizon would eat into its profits. Shares rose 2% in early trading.