As the US morning is underway, the Dow Jones Industrial Average future had risen by 32 basis points on the heels of a surge in European stock markets. The DAX 30 was up by 1.35% at the time of writing, while the CAC 40 was up by 0.7%.
As for the Dow Jones, the market remained supported as the Fed is about to reduce interest rates, and as US economy fared better than many have been expecting with Retail sales, Philly Fed, NAHB, and Empire state index outperforming economist expectations.
US Data Might Continue to Outperform
The Citi group economic surprise index is a measure that shows if US economic data is under or outperforming economists’ expectations. The index is long-term range-bound. In early 2018, the index peaked around the 80 marks, and it double-bottomed in 2019 around the minus 70 level, which is higher than the negative 80 experienced in 2017, but inline when with the levels where the index bottomed out in 2015, and 2012. As the indicator tends to mean-revert, it suggests that US economic data might continue to outperform, and this could support the Dow 30.
The sharp drop in interest rates ahead of the rate cut can explain why some economic indicators rebounded, as an example, the US ten-year government bond yield was now at 2.05% vs. the 3.24 % in October 2018.