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The Delta Variant and Markets

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What’s in Today’s Report:

  • Is the Delta Variant Impacting the Markets?
  • Retail Sales and Industrial Production Takeaways
  • Chart: Value Outperforming Growth In August

Stock futures are slightly lower as investors digest dovish central bank developments, mixed inflation data out of Europe and look ahead to the release of the Fed minutes.

The Reserve Bank of New Zealand unexpectedly left rates unchanged at 0.25% (E: 0.50%) citing COVID-19 uncertainties which crashed the kiwi to a fresh 9-month low overnight.

Economically, Eurozone HICP met estimates however U.K. PPI ran slightly hot versus expectations while revisions were to the upside which is keeping inflation concerns elevated for now.

Looking into today’s session, it should be a fairly slow morning as far as news flow goes with just one economic report to watch: Housing Starts (E: 1.61M) and no Fed officials scheduled to speak.

Then in the afternoon investors will be watching a 20 Year T-Note auction at 1:00 p.m. ET before the FOMC Meeting Minutes are released at 2:00 p.m. ET. Yesterday, there was a reversal higher in yields from overnight lows in the wake of the not-as-bad-as-feared Retail Sales report so the risk appears to be to the upside for yields which could weigh on big-cap growth names and drag major indexes lower if a rise in yields gains momentum.

Tom Essaye Quoted in Report Door on July 20, 2021

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Stock market is at risk of a correction if this happens amid the spread of the Delta variant

This market is vulnerable to a bigger pullback or correction if there’s a new negative…warns Sevens Report Research founder Tom Essaye in a research note to clients. Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on July 20, 2021

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Stock market is at risk of a correction if this happens amid the spread of the Delta variant

This market is vulnerable to a bigger pullback or correction if there’s a new… warns Sevens Report Research founder Tom Essaye. Click here to read the full article.

Inflation Expectations Dashboard

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What’s in Today’s Report:

  • Inflation Expectations Dashboard
  • EIA Data Takeaways and Oil Update

U.S equity futures are rebounding with European shares this morning while bond yields are rising from multi-month lows as investors digest a volatile week amid economic uncertainty and renewed COVID-19 concerns.

Economically, Chinese inflation data was “cooler” than expected with June CPI falling from 1.3% to 1.1% vs. (E) 1.4%, helping solidify the idea that inflation has peaked.

Looking ahead to today’s session, the calendar is quiet as there are no notable economic reports and no Fed officials are scheduled to speak.

That will likely leave investors to focus on any developments regarding the Delta variant of COVID-19 and any subsequent lockdown measures as well as price action in the bond market. As long as coronavirus headlines are not materially negative and bond yields extend this morning’s bounce, stocks should be able to claw back more of yesterday’s losses.