“Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war…”said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally lower as markets digest Wednesday’s new highs ahead of the jobs report.
Trading Thursday was quiet globally as there was no notable news, and most foreign indices were little changed.
Economic data continued to disappoint, as German Factory Orders became the latest manufacturing reading to badly miss estimates (-2.2% vs. (E) 0.2%).
Today focus will be on the Employment Situation Report and estimates are as follows: Jobs (E): 165k, Unemployment Rate (E): 3.6%, Wages (E): 3.2%. As we saw on Wednesday (and really all week) slightly disappointing or better than expected data will likely result in the S&P 500 trading above 3000, while a very strong or very weak number will likely hit stocks.
For now, markets are convinced collapsing global bond yields are just reflective of impending dovish central bank policies, and until data gets bad enough to cause worries about the economy, those lower yields will be a short term tailwind on stocks (but longer term problem, according to history).
What’s in Today’s Report:
Futures are rising with EU shares this morning as investors welcome news that Christine Lagarde (largely viewed as a dove) will likely succeed Mario Draghi as ECB President.
In the bond market, global yields hit new lows overnight (the 10-Yr touched 1.94%) on the dovish Lagarde news, but also as China’s June Composite PMI fell to 50.6 from 51.5 in May. The EU data was slightly better than expected, however, which has helped yields stabilize this morning.
Gold is also notably higher by 1.43% today and futures tested recently established multi-year highs overnight thanks to the dovish money flows.
Markets close at 1:00 p.m. today however there are multiple economic reports due out in the U.S. that warrant watching as they have the potential to move markets: ADP Employment Report (E: 140K), International Trade (E: -$53.4B), Jobless Claims (E: 220K), Factory Orders (E: -0.5%), and the ISM Non-Manufacturing Index (E: 55.8).
“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.
