Dow Futures Reach Fresh Record

Although it was a volatile day for equities following conflicting comments from two important members of the US Federal Reserve, key global benchmarks managed to reach new heights on Monday.  Remarks from William Dudley of the New York Fed echoed last week’s hawkish sentiment from Fed Chair Janet Yellen, indicating that any failure to keep tightening monetary policy could hurt the economy.

However, Chicago Fed President Charles Evans suggested during his own remarks that the Federal Reserve could delay any further tightening of interest rates should conditions merit such a response.  The resulting reaction in equities was positive after the futures selloff that transpired after Dudley’s observations.  Even though there are an abundance of concerns regarding the valuations of major technology companies, the rebound in Alphabet, Apple, Amazon, and Facebook helped spur gains in the Dow, with futures extending gains in early European trade.

In the aftermath of the election debacle in the United Kingdom, the opening of Brexit negotiations with the European Union was reportedly positive despite a growing sense of acrimony between the two parties.  Lead EU negotiator Michel Barnier met with his UK counterpart David Davis on Monday to outline a timeline for Brexit negotiations.  The major development to unfold with the language confirming that the UK would be moving ahead with a hard exit, closing the door on the possibility of the “soft” Brexit desired by certain UK policymakers.

Ultimately, the UK is still pushing for exit negotiations and the track for future relationships to be negotiated in parallel.  However, Europe’s demand for an exit payment may present a hurdle in upcoming negotiations.  In the meantime, EURGBP is surging at the outset of European trade, with pair just below 0.8800.