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Why Tech Is Outperforming Again

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What’s in Today’s Report:

  • Why Tech Is Outperforming Again
  • A Correction to the “Is FAANGM Now GARP?” Section
  • Consumer Confidence – Chart

Stock futures are trading modestly higher this morning while international markets are mixed as inflation and taper fears continue to ease ahead of key economic data due later in the week.

The only economic report overnight was the French Business Climate Indicator which came in at 107 vs. (E) 105 but the release did not materially move markets.

Today, there are no economic reports due to be released and just one Fed official is scheduled to speak: Quarles (10:00 a.m. and 3:00 p.m. ET).

There is a 5-Yr Treasury Note Auction at 1:00 p.m. ET and as has been the case for most of this year, any significant surprises in the results could move both stock and bond markets significantly, but that is less likely today given focus is on Friday’s inflation data.

Is FAANGM Now GARP?

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What’s in Today’s Report:

  • Is FAANGM Now GARP?
  • Chart: The 10-Yr Note Yield Is Approaching Key Trend Support

U.S. stock futures are extending yesterday’s gains this morning as easing inflation concerns and more accommodative Fed chatter are fueling a rebound in tech shares.

The German Ifo Survey topped estimates overnight offering further evidence that the economic recovery is accelerating in the EU.

This morning, there are several housing market reports to watch: Case-Shiller Home Price Index (E: 1.3%), FHFA House Price Index (E: 0.9%), and New Home Sales (E: 957K), before May Consumer Confidence data (E: 119.0) is released shortly after the bell.

Additionally, there is a 2-Yr Treasury Note Auction at 1:00 p.m. ET that could impact Fed policy expectations (a weak auction could rekindle taper fears) and one Fed official is scheduled to speak: Quarles (10:00 a.m. ET).

A True Curve Inversion

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What’s in Today’s Report:

  • When Is a Yield Curve Inversion Truly a Negative Signal
  • Consumer Confidence Takeaways (Hawkish Risks)

It is another quiet morning with mixed price action as stock futures edged higher on positive Italian political headlines while Treasury yields extend recent losses despite the lack of any material economic releases or trade headlines.

In the bond market, the benchmark 10s-2s yield curve spread hit a fresh 12 year low below -5 basis points this morning while the 30-Year yield has hit a new record low, signaling more broad market angst by the “smart market.”

Looking into today’s session, there are no economic reports although the EIA will release weekly oil and refined product inventory statistics at 10:30 a.m. ET and after last night’s 11.1M bbl draw reported by the API, we could see significant moves in the oil market today and that could affect stocks.

As far as other catalysts go, there is one Fed speaker today: Daly but not until after the closing bell (5:30 p.m. ET) while there is also a 5-Year T-Note Auction (1:00 p.m. ET) which could move yields and ultimately stocks.

Lastly, U.S.-China trade talks were scheduled for the front half of this week and so far there has not been any news on the topic. But, investors will continue to wait for any new developments on the trade war front as it is the primary influence on global markets right now.