“At this point, and with yields this high, markets need to see solid data and that means the ISM Manufacturing PMI moving closer towards 50 and beating expectations,” Sevens Report Research’s Tom Essaye writes. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly lower following a quiet weekend as investors look ahead to Wednesday’s CPI.
Most of the weekend news centered on China, as Yellen’s trip was viewed as constructive and will help slightly ease economic tensions between the two countries and that progress is a mild macro positive.
Economically, deflation risks are rising in China as CPI was flat y/y, highlighting the need for more economic stimulus.
Today there are no notable economic reports but there are numerous Fed speakers including Barr (10:00 a.m. ET), Daly (10:30 a.m. ET), Mester (10:30 a.m. ET) and Bostic (12:00 a.m. ET). Barr’s comments will be especially important because he may hint at more regulation for banks in the wake of the regional bank crisis, while a hawkish tone from the remaining Fed members could increase expectations for two more rate hikes (markets are currently only expecting one more rate hike).
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What’s in Today’s Report:
Futures are slightly lower following a mostly quiet night of news as investors wait for this morning’s jobs report.
Economic data underwhelmed as Japanese Household Spending (-1.1% vs. (E) 0.5%) and German Industrial Production (-0.2% vs. (E) -0.1%) both missed expectations.
Taiwan exports also fell more than expected, down 23.4%, and that’s adding to general anxiety about future global growth.
Today the only major event is the June jobs report and expectations are as follows: 213K job adds, 3.7% UE Rate, 0.3% wage increase m/m and 4.2% y/y. As we saw from yesterday’s ADP report, a “Too Hot” number will spike yields and further pressure stocks, as the rise in yields is now getting high enough to be a headwind on the market. Conversely, a “Too Cold” number will increase stagflation worries.
A job adds number in the 100k range coupled with an increase in the unemployment rate and a drop in wages remains the best outcome for stocks, and if we get that number don’t be surprised if the S&P 500 recoups all of yesterday’s losses.
What’s in Today’s Report:
Futures are moderately lower on falling expectations for Chinese economic stimulus.
A Nikkei article stated Chinese economic stimulus could be much smaller than expected, and that hit the Hang Seng hard (down 3%) and is weighing on global indices.
Economically, German Manufacturers’ Orders were much stronger than expected, rising 6.4% vs. (E) 2.0%.
Today focus will be on economic data and the key reports, in order of importance, are: JOLTS (E: 9.9M), Jobless Claims (E: 245K), ISM Services Index (E: 50.8) and ADP Employment Report (E: 235K). Hopes for a “No Landing” are the reason stocks rallied in late June, so markets will want to see better than expected data across these reports to help support those recent gains. Also, there is one Fed speaker today, Logan (8:45 a.m. ET), but she shouldn’t move markets.
What’s in Today’s Report:
U.S. equity futures are tracking global markets lower this morning after more disappointing PMI data overnight.
Economically, China’s June Composite PMI dropped to 52.5 from 55.6 in May with the Services Index notably missing estimates at 53.9 vs. (E) 55.9. Meanwhile, the Eurozone Composite PMI fell into contraction at 49.9 vs. (E) 50.3.
Looking into today’s session, there are two economic reports to watch: Motor Vehicle Sales (E: 15.3 million) and Factory Orders (E: 0.9%), although barring any huge surprises, neither should materially move markets ahead of the Service PMI data and June jobs report due later in the week.
From there, focus will turn to the release of the June FOMC Meeting Minutes at 2:00 p.m. ET as markets look for further clarity on the Fed’s commitment to raising rates further in H2’23 (a hawkish interpretation would weight on risk assets).
Finally, there is one Fed speaker: Williams but not until the closing bell at 4:00 p.m. ET so any impact by his comments will likely not be realized until tomorrow.
Like most assets, right now oil is beholden to the economy, analysts at Sevens Report Research wrote in Friday’s newsletter. Click here to read the full article.
Oil stabilized at support near the 2023 lows following Wednesday’s weekly Energy Information Administration report, which showed a “massive draw” in commercial crude-oil stockpiles, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Futures are moderately higher mostly on momentum and end of quarter/half positioning, as economic data overnight was mixed but not bad enough to interrupt the rally, said Tom Essaye, founder at Sevens Report Research. Click here to read the full article.
The EIA’s report showed the four-week moving average of gasoline supplied, a proxy for demand, rising to the highest level since November 2021. That strong consumer demand trend is one of the reasons why WTI oil hasn’t dropped to new 2023 lows in recent weeks said Richey. Click here to read the full article.
The 23 largest banks in the U.S. passed the Fed’s annual stress tests, and while none were expected to fail, the fact that there were no negative surprises is a general positive for the banking sector and financials, Tom Essaye, founder of research firm Sevens Reports, wrote Thursday. Click here to read the full article.
