Is Canada the Clear Winner from the New NAFTA? S&P futures are decidedly lower while most international markets were down overnight thanks to Italian political/budget fears, the 2.4% budget deficit Italy proposed to the EU was not well received yesterday, there are no notable US economic reports but there are two Fed speakers to watch: Quarles (10:00 a.m. ET), and more importantly Chair Powell (12:00 p.m. ET) and more.
Today the key economic report is the September ISM Manufacturing PMI (E: 59.9). That number needs to remain firm to help support stocks, more broadly, while futures are higher on the U.S./Canada trade news, that’s unlikely to spur a sustainable rally for two reasons: First, a U.S./Canada deal was always expected, so this isn’t a real surprise. Second, the big trade wildcard, China, saw things get incrementally worse over the weekend with the cancellation of the security meeting. Bottom line, I’ll be surprised and impressed if this early Canada related rally can hold throughout the day.
The official Italian budget produced a deficit of 2.4% of GDP, larger than hoped by markets. The euro extended its loses from Thursday and German bund yields declined following the announcement and more.
Today there are multiple economic reports including Durable Goods Orders (E: 2.2%), Final Q2 GDP (E: 4.3%), Jobless Claims (E: 216K) and Pending Home Sales (E: 0.0%) as well as two Fed speakers, Kaplan (2:00 p.m. ET), Powell (4:30 p.m. ET). But, Powell just spoke at length yesterday so he shouldn’t say anything too surprising. Meanwhile, unless we get a very disappointing Durable Goods report, the economic data shouldn’t move markets.
Today, the main market focus will be the Fed Events: FOMC Announcement and Forecasts (2:00 p.m. ET), Fed Chair Press Conference (2:30 p.m. ET) although, there is also one economic report out in the U.S. this morning: New Home Sales (E: 630K), stock futures are slightly positive this morning and more.
Today’s session is not likely to be a very exciting one with the Fed looming tomorrow but there are some housing market reports due out before the bell, US stock futures are pointing to a modest rebound this morning after yesterday’s pullback, on a positive note, the US did sign a revised trade deal with South Korea and more.
Today focus will be on the U.S. September PMI Composite Flash (E: 55.1), and as always we’ll be looking for stability in the economic data to imply this strong economy isn’t losing momentum, futures are little changed, economic data was slightly disappointing and more.
Today focus will be, of course, on any trade headlines, especially pertaining to next week’s U.S./China trade summit, futures are very slightly higher following a quiet night of news, British Retail Sales was the only notable economic report and more.
Futures are drifting mildly lower, oil is down modestly after the API showed a +1.2M bbl build late Tuesday, some retracement to yesterday’s solid US rally should not be shocking, but as long as tech shares hold up, sentiment towards the trade war doesn’t deteriorate, and volatility in EM doesn’t spike, the general positive trend back towards all-time highs in US stocks should continue in the near term and more.
Today, the market focus will be dominated by the new tariffs and what’s next in the trade war, late yesterday, the Trump Administration released the details of the next wave of tariffs on China: 10% on $200B worth of imports going into effect on 9/24/18 increasing to 25% at yearend and more.