Jobs Report Preview (Could It Make the Fed More Hawkish?)

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What’s in Today’s Report:

  • Jobs Report Preview – Could A “Too Hot” Report Make the Fed more Hawkish?
  • Oil Update and EIA Analysis

Futures are slightly higher following a night of mixed economic data.

Global June manufacturing PMIs were mixed as the Japanese (52.4 vs. 53.0) and UK (63.9 vs. (E) 64.2) PMIs missed estimates, while the EU manufacturing PMI beat expectations (63.4 vs. (E) 63.1.).

The net impact of the data is to show the global recovery is on going, but also that it has lost a bit of momentum.

Today’s focus will be on economic data, with the two important reports being Jobless Claims (E: 387K) and the June ISM Manufacturing Index (E: 61.1).  As has been the case, markets will want “Goldilocks” data to start the quarter, in that the numbers show solid activity, but nothing that would make the Fed taper more aggressively.  There’s also one Fed speaker, Bostic at 2:00 p.m. ET, but he shouldn’t move markets.

 

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Two Major Market Risks

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What’s in Today’s Report:

  • What Could Go (Really) Wrong? Two Candidates
  • Consumer Confidence Takeaways

U.S. equity futures are trading lower with most international markets while bond yields are falling amid growing concerns about the Delta variant of COVID-19.

The Stoxx 600 Travel and Leisure sector is down more than 5% WTD, underscoring market fears of new lockdowns or travel restrictions in Europe due to the Delta variant outbreak.

There was a slew of economic data from China to Europe released overnight however all of it largely met estimates and therefore is not materially moving markets this morning.

Today, focus will be on any new developments regarding the latest uptick in COVID-19 cases, fueled by the Delta variant, as well as the first look at the June jobs data via the ADP Employment Report (E: 533K) due out ahead of the bell.

There is also a report on Pending Home Sales (E: -1.0%) and two Fed speakers: Bostic (8:00 a.m. ET) and Barkin (1:00 p.m. ET), but unless there are any major surprises none of those should materially move markets.

Tom Essaye Quoted in Barron’s on June 24, 2021

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Eli Lilly Jumps, Dollar Tree Slips as Stock Market Chases Infrastructure Plan Higher

S&P futures are trading solidly higher this morning amid infrastructure…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Barron’s on June 24, 2021

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The 10-Year Treasury Yield Is Down but Not Out. What It Means for Stocks.

An orderly move higher in yields should be welcomed by equity markets as it will underscore investor confidence in the Fed’s ability to…Richey says. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 28, 2021

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Virgin Galactic Soars, Wix Falls, and Stocks Are Wavering

If their comments are more hawkish than expected it will be a…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on June 28, 2021

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Oil prices end at a more than a 1-week low on demand concerns, OPEC+ output uncertainty

There’s a resurgence in COVID-19 fears as case counts are rising sharply in parts of Asia, while the ‘Delta variant’ of the virus is…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

What’s the State of Infrastructure?

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What’s in Today’s Report:

  • What’s the State of Infrastructure?

Stock futures are little changed near all-time highs in quiet trading this morning as concerns about the “Delta” variant of COVID-19 linger while investors look ahead to fresh economic data in the U.S.

Economically, Japanese Unemployment edged up to 3.0% in May from 2.8% in April but Retail Sales topped estimates while Eurozone June Economic Sentiment met expectations.

Looking into today’s session, there are two reports on real estate prices due this morning: Case-Shiller Home Price Index (E: 1.2%) and FHFA House Price Index (E: 1.0%), before the more important release on Consumer Confidence (E: 118.8) is due out shortly after the bell.

There is also one Fed officials scheduled to speak: Barkin (9:00 a.m. ET) but as long as there is not a notable hawkish shift in tone, the commentary should not impact stocks.

That will leave investors focused on any news or developments regarding the “Delta” variant of COVID-19, specifically if any government imposes new lockdowns as a result and infrastructure negotiations.

Important Economic Data This Week

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What’s in Today’s Report:

  • Weekly Market Preview:  Is the Recovery Losing Momentum?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, Global PMIs Thursday (Two Important Reports)

Futures are slightly lower following a weekend of mixed macro-economic news.

On infrastructure, President Biden reaffirmed his support for the bipartisan bill, reversing Friday’s stance that he’d only sign it as part of a larger infrastructure program.  But, at this point, the entire process remains fluid, and markets don’t expect any final bills anytime soon (although we should prep for more “corporate tax hike” headlines, although that remains ultimately unlikely).

COVID trends deteriorated slightly over the weekend with Australia and South Africa re-implementing lockdowns following an increase in cases of the “delta” variant but so far this isn’t an issue in the U.S. (so it’s not directly impacting markets).

Today there are no notable economic reports but there are three Fed speakers including Williams (9:00 a.m.ET), Harker (11:00 a.m. ET) and Quarles (1:10 p.m. ET), and if their comments are more hawkish than expected it will be a slight headwind on stocks.  On infrastructure, expect more headlines but again the market doesn’t expect anything passing anytime soon, so they won’t be material influences on the markets.

Oil Update: EIA Data and OPEC+ Policy Outlook

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What’s in Today’s Report:

  • June PMI Composite Flash Data Takeaways
  • Oil Update: EIA Data OPEC+ Policy Outlook

S&P futures are trading solidly higher this morning amid infrastructure deal optimism ahead of key data today.

Risk on money flows are being driven by reports that a roughly $1T-$1.2T infrastructure deal, that will not require changes to individual or corporate tax rates, is “imminent.”

This morning is lining up to be a busy one from a catalysts standpoint as there are several important economic reports to watch including: Durable Goods Orders (E: 2.0%), Final Q1 GDP (6.4%), International Trade in Goods (E: -$87.9B), and Jobless Claims (E: 380K).

Several Fed officials are also scheduled to speak: Williams (11:00 a.m. ET), Kaplan (1:00 p.m. ET), and Bullard (1:00 p.m. ET) while there is a 7-Yr Treasury Note auction at 1:00 p.m. ET.

Bottom line, investors will want to see economic data remain strong today but importantly not run “too hot” as that could spark renewed hawkish concerns and weigh on broader equity markets as we saw last week. Additionally, Fed chatter can continue to lean hawkish but not so much that we see policy expectations turn more hawkish than the post-Fed reaction. Finally, today’s 7-Yr Treasury Note auction is the wildcard to watch as if it is a repeat of the February disaster, bond market volatility could spill over into equity markets.

Do Bonds Know Something Stocks Don’t?

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What’s in Today’s Report:

  • Do Bonds Know Something Stocks Don’t?
  • Existing Home Sales Data Takeaways

Stock futures are trading slightly higher this morning following mixed economic data overnight and a continued digestion of Powell’s “less-hawkish” testimony yesterday.

Economically, June Flash Composite PMI data was mixed as the Japan report disappointed (47.8 vs. E: 48.8) but the Eurozone print beat estimates (59.2 vs. E: 58.8).

Today, focus will be on economic data early with the U.S. PMI Composite Flash due to be released shortly after the bell (E: 67.9) and then a report on New Home Sales (E: 881K) will print at the top of the 10 a.m. hour.

Additionally, there are several Fed speakers to watch who could move markets today including: Bowman (9:00 a.m. ET), Bostic (11:00 a.m. ET), Rosengren (6:30 p.m. ET).

Finally, there is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could impact bonds and ultimately stocks if yields move on the results.