Financial Stocks Recoup Some Losses On NY Fed Speaker - Financials Roundup

Banks, lenders and other financial companies recouped some of their losses after Federal Reserve Bank of New York President William Dudley left open the possibility of a December rate hike. Mr. Dudley said it was unclear when the next hike would occur but didn't rule out another hike this year. Fears that bond investors are seeing a different economic outlook to stock investors are misplaced, according to one brokerage. "No disconnect between stocks & bonds," said analysts at brokerage Bank of America Merrill Lynch Global Research, in a note to clients. "Best explanation for low yields & high stocks [is] $1.96 trillion of central bank purchases of financial assets in 2017 alone (central bank balance sheets up $11.26 trillion since Lehman to $15.6 trillion)." Another explanation is that low inflation has been the main focus of Treasury investors, while high earnings-per-share is the main focus of stock investors. As the Fed's Dudley noted Friday, low inflation isn't necessarily a negative sign for the economy, as long as low demand isn't the underlying cause. Shares of Equifax plunged after the credit-reporting agency reported a massive data breach, affecting more than half the adult population of the U.S.

-Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

September 08, 2017 16:48 ET (20:48 GMT)