Tom Essaye Quoted in CNBC on December 7th, 2022

Bond yields fall as Wall Street worries about higher Fed rates

“Bottom line, the economic outlook is turning for the worse (outside of the labor market) and if that continues, it will support the long end of the curve,” wrote Tom Essaye of the Sevens Report. Click here to read the full article.

How Much Is Too Much?

What’s in Today’s Report:

  • How Much Is Too Much?
  • Weekly Economic Outlook

S&P futures are modestly higher this morning while overseas markets were little changed overnight as mixed economic data was digested ahead of a busy week of earnings.

Chinese GDP slowing to 6.2% vs. (E) 6.3% initially caught investors’ attention but Fixed Asset Investment, Industrial Production, and Retail Sales all solidly beat expectations, helping Chinese shares recover 1.5%+ to close with a modest gain.

Looking into today’s session, there is one economic report to watch: Empire State Manufacturing Survey (E: 0.5) and one Fed official is scheduled to speak: Williams (8:50 a.m. ET).

Meanwhile, market focus is shifting to earnings as the Q2 reporting season gets underway this week. Today, there are just two notable reports with C (E: $1.78) ahead of the bell and JBHT (E: -$0.08) after the close.

Valuation Update

What’s in Today’s Report:

  • Valuation Update – What Will Cause a Further Rally?
  • Weekly Market Preview
  • Updated Economic Outlook

Futures are modestly lower this morning as last week’s gains are digested following a quiet holiday weekend.

There were no US-China trade developments since Friday however negotiations are set to resume in Washington this week.

Economically, the British Labour Market Report largely met expectations while the headline to the German ZEW Survey for February fell to a more than 4-year low, underscoring analysts concerns about German growth expectations.

Looking ahead to the U.S. session today, there is one Fed speaker ahead of the open: Mester (8:50 a.m. ET) and one economic report due out in the first hour of trade: Housing Market Index (E: 59.0).

The market’s main focus will continue to be U.S. – China trade negotiations as a successful deal or at the very least extension to the next tariff deadline (March 1st) has largely been priced into stocks at current levels, so any renewed tensions could hit stocks, potentially hard, in the coming sessions.