Implying the Russia/Ukraine war wasn’t materially slowing growth…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed following a quiet weekend of news as investors await key economic data later this week.
Geo-politically, in-person peace talks between Russia and Ukraine will resume on Tuesday in Turkey and there remains some cautious optimism for progress towards a cease-fire.
Economically there were no notable reports overnight, although Shanghai is entering a two-phased COVID lockdown that weighed on oil and Chinese shares overnight (as that’s negative for economic growth and oil demand).
Today there are no notable economic reports and no scheduled Fed speakers, so focus will remain on oil (do the early declines continue?) and geo-politics, as any more hints of a cease fire will put a tailwind on stocks.
What’s in Today’s Report:
Futures are slightly higher following a generally quiet night of news as oil declined modestly and there was no further escalation in the Russia/Ukraine war.
Economic data disappointed overnight as UK Retail Sales missed estimates (-.3% vs. (E) 0.7%), while German IFO Business Expectations plunged to 85.1 vs. (E) 92.4, reflecting uncertainty related to the Russia/Ukraine war.
Today’s focus will be on the Consumer Sentiment Report (E: 59.7) and specifically the Inflation Expectations index, and if five-year inflation expectations move meaningfully above 3%, that will put a headwind on stocks. Pending Home Sales (E: 0.9%) is the other notable report today, but it shouldn’t move markets.
From the Fed we have multiple speakers, including Williams (10:00 a.m. ET), Daly (11:00 a.m. ET), Barkin (11:30 a.m. ET) and Waller (12:00 p.m. ET) but as long as they stick to the current “script” of being open to a 50 bps hike at the May meeting (but not calling for even more) then they shouldn’t move markets.
What’s in Today’s Report:
Futures are modestly higher following good economic data and as oil didn’t continue Wednesday’s rally (at least not overnight).
Economic data was solid as both the March EU Flash Composite PMI (54.5 vs. (E) 54.1.) and the UK Flash Composite PMI (59.7 vs. (E) 58.7) beat estimates, implying the Russia/Ukraine war wasn’t materially slowing growth.
Today focus will be on economic data, specifically the March Flash PMIs (E: 56.7). With inflation still high and the Fed threatening a 50 bps hike in May, the PMIs need to give markets a “goldilocks” number to extend the early rally, as a “Too Hot” number will invite even more Fed tightening, while a “Too Cold” number will increase stagflation risks. Outside of the PMIs, we also get Jobless Claims (210K) and Durable Goods (E: -0.5%) although they shouldn’t move markets.
From the Fed today we get Kashkari (8:30 a.m. ET), Waller (9:10 a.m. ET) and Bostic (11:00 a.m. ET) and of the three, Waller is the most important (he’s Fed leadership and if he hints at a 50 bp hike expect that to mildly weigh on stocks).
Upwards of 3 million barrels a day in Russian oil supply could be lost in the coming weeks, and “fading optimism” for a ceasefire deal between Russia and Ukraine drove gains for oil Thursday, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
The market has, to a degree, called the Fed’s bluff on rate hike plans as rate hike expectations were dialed back in the immediate wake of the dot plot release and economic projections, but the Fed is indeed tightening policy and regardless of the pace of the trend, yields are going higher in the months and quarters ahead, said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures are modestly lower with EU shares this morning as traders digest the strong post-Fed rally amid hawkish Fed speak and still elevated tensions surrounding Ukraine.
Geopolitically, talks of new sanctions on Russia by the West, including on the energy sector, are acting as a mild headwind on risk assets today.
Economically, the latest U.K. inflation data ran hot with CPI jumping to 6.2% vs. (E) 5.9% in February, a fresh 30-year high.
Today, there is one economic report due out: New Home Sales (E: 810K) but it shouldn’t move markets leaving focus on the Fed as Chair Powell is scheduled to speak at 8:00 a.m. ET. Loretta Mester and Mary Daly will also speak at 10:00 a.m. ET and 11:45 a.m. ET, respectively.
Finally, there is a 20-Year Bond auction at 1:00 p.m. ET that could move Treasury yields.
Bottom line, stocks are showing some signs of exhaustion after a strong one-week rally in the wake of the March Fed meeting, and any additionally hawkish Fed speak or negative news flow surrounding the Ukraine war could see the selling pressure pick up as near term traders book profits on recent gains.
What’s in Today’s Report:
Stock futures are cautiously higher this morning after a mostly quiet night of news as traders continue to digest Powell’s more hawkish tone from yesterday and monitor a lack of progress towards a ceasefire in Ukraine.
Bond yields are continuing to rise today with the 2-year up another 4 basis points which is pressuring the yield curve. The 10s-2s is down to just 16 basis points this morning.
There was no market-moving economic data overnight and no notable reports are due out today. There is one Fed speaker: Williams (10:30 a.m. ET) and the Treasury will hold a 52-Week Bill auction at 1:00 p.m. ET.
Bottom line, equities have shown resilience in the face of the surge in yields since last week’s Fed meeting, however, if we see yields accelerate higher again today like we did yesterday, it will be increasingly difficult for stocks to extend their recent rally. Any concrete, positive news out of Ukraine could help stocks overcome higher yields in the near term and move higher though.
What’s in Today’s Report:
Futures are slightly lower following a generally quiet weekend as investors digest last week’s gains.
The Russia/Ukraine war continued with no notable progress towards a cease-fire over the weekend and hope for a near-term peace is fading.
Economically, the only notable report was German PPI, which encouragingly missed expectations, rising 1.4% m/m vs. (E) 1.7% m/m.
Today there are no economic reports and just one Fed speaker, Bostic at 8:00 a.m. ET, and he shouldn’t move markets. So, focus will remain on Russia/Ukraine, and any hints of progress towards a ceasefire will help extend the rally, while any additional escalation will be a headwind on stocks.
What’s in Today’s Report:
Stock futures came for sale late yesterday following negative Russia-Ukraine headlines as traders continue to digest the sizeable post-Fed rally.
After the Wall Street close yesterday, the U.S. Defense Intelligence Agency released a report that Russia is increasingly likely to threaten nuclear options as the war with Ukraine drags on which weighed on risk assets broadly.
Today, there is one economic report: Existing Home Sales (E: 6.170M) but it shouldn’t move markets and two Fed officials are scheduled to speak: Barkin (10:00 a.m. ET) and Evans (2:00 p.m. ET) but neither are voting members of the FOMC.
Today is quadruple witching options expiration so expect big volumes and some technical trading in equity markets however geopolitical developments regarding Russia and Ukraine will still be able to influence price action as we close out another volatile trading week.