January Economic Breaker Panel Update

What’s in Today’s Report:

  • Some Improvement in the Economic Breaker Panel: Three Breakers Tripped, January Update

Futures are cautiously higher this morning mostly thanks to optimism about the US-China trade situation as “mid-level” meetings concluded in Beijing overnight.

President Trump’s address to the nation last night regarding border security and the government shutdown did not have a material effect on markets.

Economically, the Eurozone Unemployment Rate fell to 7.9% vs. (E) 8.1% in November but relative to the first half of 2018, the labor market in the EU continues to show signs of losing momentum.

Oil is up over 2% in the wake of the bullish API print late Tuesday that showed a significant draw in oil stockpiles ahead of today’s official weekly EIA report.

There are no economic reports in the U.S. today but several Fed events to watch including speakers: Bostic (8:20 a.m. ET), Evans (9:00 a.m. ET), and Rosengren (11:30 a.m. ET) before the December FOMC Meeting Minutes are released midafternoon (2:00 p.m. ET).

Stocks continue to have positive momentum right now as the trade war backdrop improves and monetary policy outlook has become less hawkish over the last week but the market is becoming moderately overbought at current levels, on a near term basis, and a profit taking pullback should not come as a surprise.

Economic Breaker Panel December Update

What’s in Today’s Report:

  • Economic Breaker Panel December Update (More Signs of Weakness)
  • EIA Analysis – Can the Bounce in Oil Hold?

Futures are slightly higher following a very quiet night of news, as markets digest recent volatility.

There was no change in U.S./China trade overnight but that’s a net positive as there has been legitimate and concrete progress on U.S./China trade over the past week.

Economic data was sparse as German CPI was the only notable number and it met expectations (2.3% yoy).

Today the highlight event is the ECB Meeting (E: No Change to Rates) but other than a potentially dovish tone from Draghi at the press conference, this shouldn’t impact markets too much.  Outside of the ECB, we get Jobless Claims (E: 228K) and Import & Export Prices (E: -1.0%, 0.1%).

Bottom line, geo-political headlines remain key but as long as nothing implies a reversal of U.S./China trade progress, then stocks can extend this rally, led by tech and other China sensitive sectors (industrials, materials, consumer discretionary).

Finally, at a subscribers suggestion (thank you Maria!) we are now including the 10’s-2’s Treasury yield spread in the currencies and bonds table.  Given how close the curve is to inversion, we’ll update that spread daily going forward so you’ll have a consistent place to check and see the latest levels.  We hope you find it useful.

Another Breaker Tripped

What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – October Update: A Macro Breaker Flipped

US stock futures are slightly lower this morning as EU shares are declining on renewed concerns about Italy’s budget despite mostly good economic data overnight.

The Italian Parliamentary Budget Office raised doubts about the government’s growth forecast of 1.5% in 2019 which would ultimately mean a larger budget deficit than previously expected, and that has triggered risk-off money flows this morning.

Economically speaking however, Industrial Production data across Europe was generally better than expected and revisions were mostly positive. While that is currently being overshadowed by the Italian budget drama, it is a positive for the medium term outlook for EU markets.

Today, we get our first of two notable inflation figures this week: PPI (E: 0.2%) as well as Wholesale Trade (E: 0.8%) and there are two Fed speakers to watch: Evans over the lunch hour (12:15 p.m. ET) and Bostic after the close (6:00 p.m. ET).

Otherwise, focus will remain on bond yields and tech shares. For stocks to continue to stabilize or turn higher this week, we will need to see the former hold steady or even pullback slightly and the latter once again outperform.