Why are Treasury Yields Breaking Out?

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What’s in Today’s Report:

  • Why Are Treasury Yields Breaking Out (And Cyclical Sectors Outperforming?)
  • Weekly EIA Report and Oil Update

Futures are modestly higher mostly on momentum from yesterday’s rally, following a quiet night of news.

The Vice Presidential debate was traditional and didn’t provide any surprises and won’t impact the Presidential race.  Currently the market is fully expecting a Biden win and partially pricing in a “Blue Wave” in November.

Economically, German exports slightly beat estimates, rising 2.4% vs. (E) 1.5%, but that number isn’t moving markets.

Today focus will remain on chatter of any potential stand-alone stimulus bills for the airlines or direct payments to citizens, but nothing is expected.  Beyond stimulus, we do get an important economic report via Jobless Claims (E: 819K), and markets will want to see continued improvement to show the recovery is indeed ongoing.  A drop below 800k would be positive surprise.

Finally, there are multiple Fed speakers today including Rosengren (12:10 p.m. ET), Kaplan (1:00 p.m. ET), Bostic (2:00 p.m. ET) and Barkin (2:30 p.m. ET), but none of them should move markets.

Tom Essaye Quoted in Barron’s on October 6, 2020

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“Markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up…” writes The Sevens Report’s Tom Essaye. Click here to read the full article.

Market Multiple Table: September Update

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What’s in Today’s Report:

  • Market Multiple Table: September Update

Stock futures are modestly lower today as investors digest yesterday’s strong equity rally and assess the COVID-19 outbreak among politicians after President Trump’s return to the White House from Walter Reed Medical Center.

Economically, German Manufacturers’ Orders grew 4.5% vs. (E) 2.3% in August but positive economic data remains a near-term negative for risk assets as it reduces pressure for lawmakers to unleash more stimulus.

Looking into today’s session, there are two economic reports to watch: Goods & Services Trade (E: -$66.5) before the bell and JOLTS (E: 6.250M) shortly after the open but neither is expected to materially move markets.

There are also multiple Fed speakers today including: Harker (12:00 p.m. ET), Bostic (2:00 p.m. ET), and Kaplan (6:00 p.m. ET) but Powell (10:40 a.m. ET) will be the most closely watched as the market looks for further clues into future policy.

Beyond economic data and Fed speakers, markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up call today so investors will be anxiously waiting for any updates from their conversation.

Tom Essaye Quoted in Barron’s on October 2, 2020

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For now, though, all eyes are on Washington. “For the next several days reports of President Trump’s health will…” writes The Sevens Report’s Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on September 30, 2020

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“Futures are lower amid rising concerns that the outcome of the presidential election may be contested following…” remarked Sevens Report Research founder Tom Essaye in an early morning note to clients. Click here to read the full article.

Presidential Debate 2020

What Trump’s COVID-19 Diagnosis Means for Markets

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What’s in Today’s Report:

  • What the Trump COVID-19 Diagnosis Means for Markets

Futures are sharply lower following the Trump COVID-19 diagnosis.

President Trump and the First Lady tested positive for COVID-19 on Thursday, and have begin their quarantine process.  However, the White House has said it expects the President to continue in his duties as he recovers.

There was minimal economic data overnight.

For the next several days reports of President Trump’s health will drive markets, and obviously if he becomes very sick that will hit stocks in the short term.

Beyond the COVID diagnosis, we still have the jobs report today, and estimates are as follows:  Job adds:  894K, UE Rate: 8.2%.

Finally, we also get Consumer Sentiment (E: 79.0) and have two Fed speakers, Harker (9:00 a.m. ET) and Kashkari (1:00 p.m. ET), but none of that should move markets.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Takeaways and Oil Data

Futures are moderately higher on more stimulus hopes combined with solid economic data.

Positive chatter regarding a potential stimulus deal continued overnight with whispers implying the deal may be worth more than $1.5T.  But, I want to again caution that many hurdles remain to get a deal done by the election (most important of all being if it can pass the Senate, and that remains unclear).

Economic data was solid overnight as Final Sept. EU manufacturing PMIs met expectations at 53.7.

Stimulus headlines will drive trading today and there’s an outside chance we get an announcement of a deal between Treasury Secretary Mnuchin and Speaker Pelosi.  But, while the market will embrace that, as mentioned, it remains to be seen if the Senate will pass something prior to the election.

Outside of stimulus, we get two important reports on growth (Jobless Claims (E: 850K and ISM Manufacturing PMI (E: 56.3)) and one on inflation (Core PCE Price Index (1.4%)) and the market will want to see solid numbers across the board to imply the economic recovery is not plateauing.  Finally, there are two Fed speakers today, Williams (11:00 a.m. ET) and Bowman (3:00 p.m. ET), but neither should move markets.

Tom Essaye Interviewed with Yahoo Finance on September 29, 2020

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Tom Essaye, Sevens Report Research Founder, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what’s moving the markets on Monday morning. Click here to watch the full interview.

Election Preview Part II

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What’s in Today’s Report:

  • Stimulus Update
  • Election Preview Part II (What’s the Probability of a Contested Election?)

Futures are lower amid rising concerns that the outcome of the presidential election may be contested following last night’s debate while there has been little to no progress on fiscal stimulus (at home or abroad) in the face of quickly rising new COVID-19 cases.

Economically, China’s official Manufacturing PMI rose to 51.5 vs. (E) 51.2 in September thanks to strong export orders which helped ease concerns about the health of the global economic recovery.

Looking to today’s calendar, we will receive our first look at September labor market data via the ADP Employment Report (E: 650K) as well as Final Q2 GDP (E: -31.7%), both ahead of the open while the Pending Home Sales report (E: 3.1%) will be released shortly after the bell.

Additionally, there are three Fed speakers today: Kashkari (9:30 a.m. ET), Bowman (1:40 p.m. ET), and Kaplan (6:00 p.m. ET) and the market expects all of them to maintain a very dovish tone.

Bottom line, investors will remain focused on two main factors today: 1) Will speaker Pelosi and Treasury Secretary Mnuchin pull off a last minute stimulus deal before the election (not expected)? And 2) what are the chances the presidential election is contested (the higher the chances the more negative for markets)?

Election Preview

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What’s in Today’s Report:

  • Thoughts on the Friday/Monday Rally
  • Election Preview

Stock futures are flat following a mostly quiet night of news as traders begin to look ahead to tonight’s debate between President Trump and former VP Biden.

The only economic release o/n was Eurozone Economic Sentiment which beat on the headline (91.1 vs. E: 89.5) but had soft details which is weighing modestly on EU shares.

House Democrats presented a $2.2T relief bill late yesterday but realistically it will not be passed before election day, and therefore is not having a significant impact on markets this morning.

Today, there are two economic reports, the latter of which will be more important to watch: Case-Shiller House Price Index (E: -0.1%) and Consumer Confidence (E: 88.8) while there is just one Fed official scheduled to speak (twice): Williams (9:15 a.m. & 1:00 p.m. ET).

With the debate looming tonight, the focus will be on politics and the latest attempt at a stimulus bill by Congress. And barring any unexpected progress on getting a stimulus deal done in the very near term, markets are lining up to have a relatively quiet session today.