Summer Market Events Part 2: The Fed

What’s in Today’s Report:

• Key Summer Market Events for the Fed

Futures are drifting modestly higher following a generally quiet night of news.

Economic data was solid as European Commission Economic Sentiment beat estimates (114.5 vs. (E) 112.1) while the Japanese unemployment rate was in-line with expectations.  But, neither number is moving markets.

Earnings overnight were very strong (especially in the retailers like COST) but questions remain about the sustainability of the results so they aren’t causing a big rally.

Today focus will be on the Core PCE Price Index (E: 0.7% m/m, 3.0% y/y). The market expects and has priced in a strong number, so something slightly above estimates should not cause a hawkish reaction (yields higher/stocks lower).  But, if we see the Core PCE Price Index print close to 4% yoy, that would likely be a headwind on stocks (and push the 10 year yield towards 1.70%).