The yield has been rangebound between 1.46% and 1.54%. A move above that higher level could indicate the yield…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures are down more than 1% and bond yields continue to climb higher amid renewed stagflation fears while traders look ahead to this week’s U.S. jobs data.
Economically, data was disappointing overnight as German Manufacturers Orders fell by -7.7% vs. (E) -2.1% in August and EU Retail Sales for the same month rose just 0.3% vs. (E) 0.8%.
Meanwhile, U.K. 10-year Gilt breakevens jumped 10 basis points to the highest since 2008 (above 4%) as surging energy costs add to inflation concerns.
Looking into today’s session, focus will be on the September ADP Employment Report (E: 428K) ahead of the bell while there is one Fed official speaking this morning: Bostic (9:00 & 11:30 a.m. ET). The bond market is continuing to have a significant impact on stocks right now so if there is a spike higher in yields in the wake of the private payrolls print, expect stocks to remain under pressure today.
What’s in Today’s Report:
Futures are enjoying a modest bounce following yesterdays’ declines after a generally quiet night of news.
Economic data was solid overnight as both EU (56.2 vs. (E) 56.1) and UK (54.9 vs. (E) 54.1) September Composite PMIs beat estimates, reflecting stability in the global economic recovery.
On inflation, Euro Zone PPI rose 1.1% vs. (E) 1.3%, implying inflation pressures could be starting to ease.
Today focus will be on economic data and specifically the ISM Services PMI (E: 60.0). Markets will want to see stability in this number to further confirm the COVID spike in July/August didn’t have a lasting impact on the recovery. We also get two Fed speakers today, Barkin (10:30 a.m. ET) and Quarles (1:15 p.m. ET), and markets will continue to be on the lookout for any signs of a compromise on the reconciliation/debt ceiling bill (although nothing material is expected today).
What’s in Today’s Report:
Futures are modestly lower following a mostly quiet weekend of news as investors digested last week’s volatility.
On the Debt Ceiling and other Washington issues, there was no major progress over the weekend although Democrats continue to narrow the gap and progress is occurring towards a compromise deal between liberals and moderates (the compromise is likely at $1.5 trillion and the current negotiations are just above $2 trillion, down from $3.5 trillion).
Trade will be in focus again today as the Biden Administration gives a China trade and tariff update at 10:00 a.m. although no new tariffs are expected.
Today there are no notable economic reports although there are two Fed speakers, Bullard and Rosengren, both at 10:00 a.m. ET. So, focus will be on the trade speech at 10:00 and on the Democrat’s ongoing negotiations. Any signs of further progress towards a deal could help extend Friday’s rally.
What’s in Today’s Report:
Futures are modestly lower to start the fourth quarter as House Democrats failed to pass infrastructure legislation, while economic data was better than expected.
House Democrats remain divided about the size of the infrastructure and reconciliation bills, and the Debt Ceiling can’t be increased until a compromise is found.
EU and UK global final PMIs slightly beat estimates while EU Core HICP (their CPI) was slightly hot (1.9% yoy vs. (E) 1.8% yoy), implying the global recovery remains on track and that inflation pressures are still firm.
Today’s focus will be on important economic reports. First, the Core PCE Price Index (E: 0.2%, 3.6%) is the Fed’s preferred measure of inflation and if it’s much hotter than expectations, that will push yields higher and be another headwind on stocks. Also, the ISM Manufacturing PMI (E: 59.8) gets released and markets will want to see stability there. We also get Consumer Sentiment (E: 71.0) and the inflation expectations component will be closely watched. Finally, there are two Fed speakers today, Harker (11:00 a.m. ET) and Mester (1:00 p.m. ET) but neither should move markets.
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Bottom line, the stock market is being driven by the bond market this week and if we see…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
Really what you’re seeing is, across asset classes, the market is adopting a pro-cyclical view, which means better growth in the future…Tom Essaye, The Sevens Report Research Founder, told Yahoo Finance Live. Click here to read the full article.
What’s in Today’s Report:
Futures are higher following news a government shutdown will be avoided and despite mixed economic data.
Senate Majority Leader Schumer announced a deal to fund the government and avoid a shutdown tomorrow, although this was always expected (and this does not address the Debt Ceiling).
Economic data was mixed as the Chinese manufacturing PMI fell below 50 (49.6 vs. (E) 50.1) while UK GDP handily beat estimates at 5.5% vs. (E) 4.8%, but the data isn’t moving markets.
Today the key report will be Jobless Claims (E: 335K) and markets will want to see them drop back towards 300k. We also get the Final Q2 GDP (E: 6.7%) but at this point, that’s a very “old” number. There are also numerous Fed speakers today including more Powell/Yellen testimony along with Williams (10:00 a.m. ET), Bostic (11:00 a.m. ET), Harker (11:30 a.m. ET), Evans (12:30 p.m. ET), Bullard (1:05 p.m. ET), and Daly (2:30 p.m. ET).
Finally, today is the last trading day of the month and quarter so some additional volatility on month/quarter-end positioning shouldn’t be a surprise.
There really isn’t a global contagion risk with Evergrande because in the end, and as far as we know, the loans…wrote Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
Bottom line, the stock market is being driven by the bond market this week and if we see bonds…said Tom Essaye, founder and president of Sevens Report Research. Click here to read the full article.
