What’s in Today’s Report:
- Mind the Fed Funds Gap
S&P futures are slightly lower as this week’s dovish rally to new all-time highs is digested amid further escalations between the U.S. and Iran while economic data was mixed.
The U.S. reportedly called off a retaliatory strike against Iran “at the last minute” overnight which is weighing on investor sentiment but supporting oil prices (Brent +1.60%).
Flash PMIs were mixed o/n with Asian data slightly underwhelming while European data slightly beat expectations. But none of the releases were too far from estimates so the data is not materially affecting markets this morning as investors remain focused on this week’s dovish shift in central bank policies and look ahead to the G20.
Today, there are two economic releases to watch: Flash Composite PMI (E: 50.9) and Existing Home Sales (E: 5.28M). It will be important for the former to remain soft to keep the “Fed Put” alive, but not so bad that the data stokes fears that the Fed is “too far behind the curve.”
Speaking of the Fed, Brainard and Mester speak on a panel together at 12:00 p.m. ET and Daly is scheduled to speak at 12:30 p.m. ET. Given the market’s significant dovish shift in policy expectations this week, investors will be watching closely for any further clues as to when the Fed plans to cut (July?) or by how much (25 or 50 bp?).