It’s Not How High Rates Go Anymore, It’s How Long They Stay There
What’s in Today’s Report:
- It’s Not How High That Matters Anymore, It’s How Long
- Retail Sales & Empire State Manufacturing Survey Takeaways (Very Mixed Reports)
- Chart – S&P 500 Violates 50 Day Moving Average for the First Time Since March
Stock futures are little changed this morning as new stimulus efforts by China help offset more negative global economic data and a hawkish leaning RBNZ meeting decision.
Chinese Home Prices fell -0.1% vs. (E) 0.0% prompting a cash injection and stronger currency fix by the PBOC which helped stabilize global risk assets overnight given the recent turmoil in the world’s second largest economy.
In Europe, U.K. Core CPI held steady at 6.9% vs. (E) 6.8% in July solidifying peak rate expectations of 6.0%, however bond yields are retreating modestly from the week’s highs which is helping stocks continue to stabilize today.
Looking into today’s session, we will get two economic reports this morning: Housing Starts (E: 1.455 million), Industrial Production (E: 0.3%) before focus will turn to the release of the July FOMC meeting minutes at 2:00 p.m. ET.
Bottom line, the market wants to see more “Goldilocks” data consistent with a soft economic landing and no evidence in the Fed minutes that suggests a more hawkish policy path than is currently expected (rate cuts beginning H1’24). Otherwise, volatility is likely to remain elevated with equities under pressure.
