Growth scares will cause a temporary decline in yields but unless there’s a real threat of a global slowdown (which there isn’t yet) then the direction of global yields remains higher, and we again think it’s just a matter of time until the 10-year yield hits 3%…Tom Essaye, founder of Sevens Report, said in a research note. Click here to read the full article.
What’s in Today’s Report:
S&P futures are up 1% this morning as yesterday’s steep declines are digested amid upbeat earnings and guidance out of MSFT after the close yesterday (MSFT is up 5%).
Economic data was net negative overnight as Australian CPI was hotter than expected while U.K. CBI Distributive Trades and the German GfK Consumer Climate Index both badly missed estimates, however, investors are shrugging off the data as the focus is on earnings this morning.
Looking into today’s session, there are two economic reports: International Trade in Goods (E: -$105.0B) and Pending Home Sales (E: -1.1%) but neither should move markets and no Fed officials are scheduled to speak.
There is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could move the bond market as yields have pulled back considerably since last week’s highs and a reversal back higher could become a headwind on stocks again, especially growth names.
Finally, the market’s main focus at the moment is earnings and we will get results from: BA (-$0.26) and HOG ($1.52) before the bell and then FB ($2.58), F ($0.39), PYPL ($0.89), QCOM ($2.91), and DFS ( $3.58) after the close. If earnings, especially by big tech companies can top estimates, a relief rally could play out as stocks are near-term oversold, however, momentum through yesterday’s close has been decidedly negative and the price action remains heavy.
What’s in Today’s Report:
Futures are modestly lower this morning after a quiet night of news as yesterday’s big intraday reversal higher is being digested.
Today is lining up to be a busy one with a slew of economic data due to be released, in order of importance: Durable Goods (E: 1.0%), Consumer Confidence (E: 106.8), Case-Shiller Home Price Index (E: 1.5%), FHFA House Price Index (E: 1.6%), and New Home Sales (E: 772K). Investors will want to see solid data that contradicts the growing fear that the Fed is getting more aggressive with policy into an economic slowdown.
There are no Fed speakers today but there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could move the bond market and ultimately impact stocks in the early afternoon.
The market’s main focus today will be on earnings with: UPS ($2.87), PEP ($1.24), GE ($0.20), MMM ($2.33), and JBLU (-$0.85) reporting ahead of the bell while MSFT ($2.18), GOOGL ($25.63), GM ($1.57), V ($1.65), and COF ($5.39) are all scheduled to release results after the close.
Bottom line, for yesterday’s late day reversal higher in equity markets to continue today, we need to see good economic data, steady or falling bond yields, and most importantly favorable earnings, especially out of big tech names like GOOGL and MSFT.
Treasury yields surged again on the idea of even more rate hikes, specifically that the Fed could hike 50 bps (basis points) in May, June, and July…said Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are moderately lower on concerns about economic growth as COVID cases rose again in China while hopes for a diplomatic solution in Ukraine have all but faded.
China is continuing with its “zero COVID” policy and with cases rising again markets are fearing more shutdowns, perhaps in Beijing, which is a negative for global growth.
Russian President Putin essentially eliminated a diplomatic solution to the war, ensuring a further drawn-out conflict, which will also be a headwind on global growth.
Today there are no economic reports and no notable Fed speakers, but worries about global growth are the reason stocks dropped last week, so markets need some positive news on growth to stabilize in the near term.
On the earnings front, this is a very important week and while the most important reports don’t come out until later this week, two reports we’ll be watching today are KO ($0.58) and WHR ($4.90).
What’s in Today’s Report:
Futures are modestly lower following Thursday’s reversal lower as economic data and earnings were mixed overnight.
April global flash PMIs were mixed as the EU data was solid (55.8 vs. (E) 53.9), but the UK data was soft (57.6 vs. (E) 59.0). UK retail sales also badly missed (-1.4% vs. (E) -0.3%) and the lackluster data is weighing on European shares.
Earnings overnight were “ok” although SNAP underwhelmed investors (so expect more pressure on tech).
Today focus will be on economic data via the April Flash Composite PMI (E: 57.5) and markets will want to see stability in the data to further ward off stagflation concerns.
On the earnings front, there are only a few notable reports today (and all are in the morning): VZ ($1.35), AXP ($2.43), SLB ($0.32).
What’s in Today’s Report:
Futures are moderately higher as earnings continue to come in better than expected.
TSLA and UAL both posted better than expected earnings and UAL was very upbeat on travel spending and investors are viewing that as a positive macro-economic signal.
EU HICP (their CPI) slightly missed expectations (7.4% vs. (E ) 7.5% yoy), again hinting that inflation may be peaking.
Today will be a busy day with important Fed speak, economic data and earnings. The key event (potentially) is Fed Chair Powell speaking this morning and while he’s not likely to drop any surprises, it’s always possible. Economically, the key report today is the Philly Fed Manufacturing Index (E: 20.5) and markets will want to see stability in the data. We also get Jobless Claims (E: 175K) and Fed President Bullard (1:00 p.m) but they shouldn’t move markets.
On the earnings front, notable reports today include: T ($0.78), AAL (-$2.48), FCX ($0.88), PM ($1.48), UNP ($2.55), SNAP ($0.01), PPG ($1.13).
Unseasonably cold temperatures are driving elevated spring heating demand in the U.S. amid an already bullish fundamental backdrop of subdued inventory levels and no real signs of rising production in the near to medium term…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Additionally, a geopolitical fear bid remains in the market and demand is expected to remain elevated leaving the path of least resistance decidedly higher with a medium-term upside target of $9.06…analysts at Sevens Report Research said in Monday’s newsletter, MarketWatch reports. Click here to read the full article.
Looking at the yield curve, the 10s-2s spread continued to widen out and is now smack in the middle of the 30-40 basis point resistance range, and we think that’s a critical resistance level…said Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.