Renewed Rotation Risks (Smart Money Is Getting Defensive)
Renewed Rotation Risks (Smart Money Is Getting Defensive): Start a free trial of The Sevens Report.
What’s in Today’s Report:
- Recent Sector Performance Points to Smart Money Getting Defensive
- Chart – 10Y-2Y Yield Curve Spread Revisits the Zero-Bound
U.S. equity futures are slightly higher after a mostly quiet night of news as traders look ahead to NVDA earnings.
There was no economic data overnight but the BOJ’s Deputy Governor, Himino, reiterated that policy makers would continue raising rates with the “utmost vigilance,” which supported a modest bid in equity markets and other risk assets overnight.
Looking into today’s session, there are no notable economic reports and just one Fed speaker after the close: Bostic (6:00 p.m. ET).
There is a 5-Yr Treasury Note auction at 1:00 p.m. ET and given the strong performance in the belly of the duration curve since the start of August, traders will be looking for demand to remain solid to confirm the recent drop in yields is sustainable.
Finally, likely the biggest catalyst of the week will come after the close today with NVDA earnings ($0.65) due shortly after the bell. Other notable companies reporting quarterly results today include CRM ($2.35) and HPQ ($0.86) but the main focus will be on NVDA as options traders are pricing in a volatile 10%+ reaction (up or down) to the earnings release and given the stocks heavy weight in the major indexes, a move of that magnitude will have an impact on the broader market in the back half of the week.
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