“Oil did not go into free-fall [Tuesday] because of any supply side disappointment or OPEC+ developments, but because of…” Tyler Richey, co-editor of Sevens Report Research, told MarketWatch. Click here to read the full article.
“The trade truce is a positive and the policy extension by OPEC+ keeps the supply side argument in favor of the bulls, but there remain too many unknowns about…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“For now what the bond market is doing is signaling the chances of a recession are more likely than the chances of a renewal of the expansion,” said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
U.S. stock futures are slightly lower this morning as investors continue to digest the G20 “trade truce” against further deteriorating global economic data so far this week while news flows overnight were very slow.
Economic data overnight was largely Goldilocks with German Retail Sales coming in at -0.6% vs. (E) 0.7% (but revisions were positive) while Eurozone PPI was -0.1% vs. (E) 0.0%. Additionally, the RBA cut rates, as expected.
Looking into today’s session the only economic data coming out today is Motor Vehicle Sales (E: 17.0M) while there is just one Fed official scheduled to speak: Mester (11:00 a.m. ET).
That will likely make for a quiet session as traders look ahead to U.S. jobs data due out later in the week while trading schedules are non-typical thanks to the 4th of July holiday on Thursday.
What’s in Today’s Report:
Futures are surging after Trump and Xi did what was widely expected at the G20 and reached a trade “truce.” On balance, the meeting was a mild positive, but not to the extent futures are implying this morning (more on that inside the Report).
Economic data, meanwhile, was universally disappointing overnight. Every manufacturing PMI missed expectations this morning including those from China, Germany, the EU and Great Britain. All of those PMIs are now below 50, signaling widespread contraction in manufacturing activity.
OPEC, meanwhile, extended current production caps for six to nine months at their meeting this week, longer than was expected, and oil is rallying 2% as a result.
Today will be spent digesting the G20 “truce” and seeing if markets can hold these early gains once more details emerge. On the economic front, the key number today is the ISM Manufacturing PMI (E: 51.2) and it needs to be “Goldilocks” to support this rally.
What’s in Today’s Report:
Futures are modestly positive again this morning on more U.S.—China trade optimism.
President Trump said he thought talks with President Xi would be “productive” and that’s boosting futures.
Economic data largely met expectation although Japanese IP (2.3% vs. (E) 0.3%) and EU HICP (their CPI) slightly beat estimates (1.1% vs. 1.0% yoy).
Focus will clearly be on the looming Trump/Xi meeting but there’s an important economic data point to watch today: Core PCE Price Index (E: 0.1% m/m, 1.5% y/y). If that shows inflation that’s stronger than estimates, it’ll reduce the chances of a rate cut (bad for stocks), while a soft number will result in a “bad is good” reaction in markets.
“For now what the bond market is doing is signaling the chances of a recession are more likely than the chances of a renewal of the expansion,” said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
“We’ve consistently repeated that the rally in stocks to essentially new highs has been driven by hopes of Fed rate cuts and a U.S.-China trade truce…” said Tom Essaye, founder of The Sevens Report. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally higher again and this morning is largely a repeat of Wednesday morning as a news article that is positive on U.S.—China trade in tone, yet offers no new information, is causing a mild rally.
The South China Morning Post (a government media source) posted an article stating the U.S. and China will reach a temporary trade “truce” at the G-20.
Economic data was sparse and is not moving markets.
Today we do get some notable economic reports, including Final Q1 GDP (E: 3.1%), Jobless Claims (E: 218K) and Pending Home Sales (E: 0.6%).
The GDP report will get the most attention but the claims data is the most important release today, but that said none of these reports should move markets. Instead, we will continue to be glued to the scrolling ticker for any reports or updates on what’s expected at the G-20, as that event continues to hover like a cloud over all markets this week.
“Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war and global economy, the demand…” says Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
