What’s in Today’s Report:
- Infrastructure Outlook: Good/Bad/Ugly
- Oil Update & EIA Analysis (Can the Rally Keep Going?)
Futures are little changed following a quiet night and ahead of the week’s two big events, the ECB decision and U.S. May CPI report.
Economic data was sparse although Japanese PPI rose more than expected at 4.9% vs. (E) 3.8% yoy. But, investors expect high inflation readings this month so it’s not moving markets.
Today the two key events are the ECB Rate Decision (E: No Change) and U.S. CPI (E: 0.4% m/m, 4.6% y/y). Generally speaking, if the ECB is specific on tapering and core CPI runs close to 4.0% yoy (expectations are for 3.4% yoy in Core CPI) then we should expect volatility as the data will imply less central bank accommodation and more inflation. Conversely, if the ECB is vague on tapering and inflation largely meets expectations, then stocks can extend the rally.
The other notable event this morning is Jobless Claims (E: 369K) but given the issues with the labor market are supply driven (people not wanting to work) the market isn’t as focused on jobless claims any longer.