“The Biden administration introduced an ‘SPR put’ to the oil market this week when they announced purchasing crude to replenish reserves when prices dip towards $70 a barrel,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
Biden’s visit to Saudi Arabia last week has “already become old news as traders refocus on the major influences on the oil market right now: the Russia-Ukraine war, OPEC+ policy outlook, and recession concerns linked to high inflation, COVID lockdowns in China, and aggressive central bank policy around the globe…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher as bond yields and the dollar pulls back ahead of the Fed and an emergency ECB meeting that will address fragmentation and the bank’s bond-buying programs sparking risk-on money flows this morning.
Economically, Chinese Fixed Asset Investment, Industrial Output, and Retail Sales were all better than feared overnight which is easing concerns about the health of global growth trends.
Looking into today’s session, there is a slew of economic data due out in the U.S. including: Retail Sales (E: 0.1%), Empire State Manufacturing Index (E: 5.5), Import & Export Prices (E: 1.2%, 1.3%), and the Housing Market Index (68). At this point, the Fed is expected to hike aggressively in the months ahead to tame inflation regardless of the state of economic growth, so the stronger the data, the better for risk assets.
After the flurry of data in the morning, the market focus will shift to the Fed with the FOMC Announcement at 2:00 p.m. ET and the Fed Chair Press Conference 2:30 p.m. ET. As discussed in more detail in today’s report, a 75 basis point hike may not cause further losses in equities as long as investors gain confidence in the Fed’s ability to get inflation under control. That will be the key to how stocks and other markets react to today’s decision.
What’s in Today’s Report:
Futures are modestly higher following potentially positive news out of China.
First, on the geopolitical front, Biden and Xi held a call on Thursday night where they discussed avoiding conflict. Second, Chinese regulators clarified they just slowed video game approvals, not halted them and that’s helping Chinese tech and internet stocks to rally.
On COVID, Biden’s mask mandates are getting a lot of headlines but they won’t have any direct market implications.
Today’s focus will be on PPI (E: 0.6%, 8.3%), which will give us the latest insights into inflation and if the number is materially higher than estimates, it will likely cause some mild volatility. We also have one Fed speaker, Mester at 9:00 a.m. ET, and markets will look for confirmation that the Fed will start tapering QE this year, but it will be gradual.
A political negative for Biden which could hurt the chances any infrastructure bill is passed…wrote The Seven Report’s Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures are drifting slightly higher following a mostly quiet night of news.
COVID headlines were mixed as Los Angeles reimposed an indoor mask mandate (negative) while President Biden said the U.S. could ease travel restrictions from Europe soon (positive). Bottom line, concerns about the Delta variant are a market influence (mild headwind) but at this point, it’s not enough to cause a material pullback.
Economic data was minimal as EU HICP met expectations (0.3% m/m and 1.9% y/y).
Today, focus will be on economic data, specifically Retail Sales (E: -0.4%) and the inflation expectations component in Consumer Sentiment (E: 87.0). As has been the case, markets will want “Goldilocks” results for both retail sales and inflation expectations (so strong, but not too strong). There is also one Fed speaker, Williams (9:00 a.m. ET), but he shouldn’t move markets.
What’s in Today’s Report:
Futures are slightly lower following a weekend of mixed macro-economic news.
On infrastructure, President Biden reaffirmed his support for the bipartisan bill, reversing Friday’s stance that he’d only sign it as part of a larger infrastructure program. But, at this point, the entire process remains fluid, and markets don’t expect any final bills anytime soon (although we should prep for more “corporate tax hike” headlines, although that remains ultimately unlikely).
COVID trends deteriorated slightly over the weekend with Australia and South Africa re-implementing lockdowns following an increase in cases of the “delta” variant but so far this isn’t an issue in the U.S. (so it’s not directly impacting markets).
Today there are no notable economic reports but there are three Fed speakers including Williams (9:00 a.m.ET), Harker (11:00 a.m. ET) and Quarles (1:10 p.m. ET), and if their comments are more hawkish than expected it will be a slight headwind on stocks. On infrastructure, expect more headlines but again the market doesn’t expect anything passing anytime soon, so they won’t be material influences on the markets.