“Republican Representatives have said this morning that they have the votes to pass it. If that comes to fruition, that should remove a headwind from risk assets and open the door to a continued move higher in equity markets,” writes Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed as markets digest the Thursday/Friday rally amidst a mostly quiet weekend of news.
Oil prices are solidly higher (Brent crude up 1.7%) after Saudi Arabia announced a voluntary 1M bpd production cut for the next month, although that’s not seen as a sustainable bullish catalyst.
Economically, global service PMIs were mixed as the Euro Zone Service PMI missed expectations (55.1 vs. (E) 55.9) while the UK and Chinese service PMIs were in-line.
Today focus will be on the ISM Services Index (E: 52.0.) and specifically the price index in this report. Last week, a sharp drop in the ISM Manufacturing PMI Prices Paid Index ignited the rally, and if we see a similar drop in the services price index, it’ll help extend the rally as markets will get more confident disinflation is accelerating.
What’s in Today’s Report:
Futures are higher and global markets rallied overnight on rising hopes for a rapid decline in inflation.
Inflation metrics on Thursday hinted at accelerating disinflation (ISM Prices Paid and Unit Labor Costs were yesterday’s bullish catalysts) and that was reinforced this morning by a decline in Korean CPI.
Chinese stocks surged overnight thanks to a Bloomberg article that raised hopes for more government stimulus.
Today focus will be on the jobs report and estimates are as follows: 180K job adds, 3.5% Unemployment Rate and 0.3% m/m & 4.4% y/y wage gains. Given yesterday’s momentum, if the jobs report shows solid job gains and underwhelming wage growth, the rally should continue. However, if the jobs report comes in “Too Hot” on the headline or wages, don’t be surprised if markets give back part of yesterday’s rally.
What’s in Today’s Report:
Stock futures are modestly lower this morning as soft Composite PMI data in China overshadowed easing inflation numbers in Europe overnight while traders await a House vote on the new debt-limit bill.
China’s Composite PMI fell to 52.9 in May down from 54.4 in April which confirmed that the economic recovery in the world’s second largest economy is underwhelming investor expectations which were admittedly lofty coming into the year.
In Europe, French CPI dropped to 5.1% vs. (E) 5.7% y/y in May and PPI plunged to 7.0% vs. (E) 12.8% which is driving some less-hawkish money flows this morning, supporting a bid in global bond markets.
Looking into today’s session, there are two economic reports to watch: Chicago PMI (E: 47.0) and JOLTS (E: 9.35 million). Investors will want to see some moderation in the data but still not a sharp drop-off in either growth or employment as that would rekindle worries of a hard landing and weigh on risk assets.
There are also multiple Fed speakers including: Collins (8:50 a.m. ET, 12:20 p.m. ET), Harker (1:30 p.m. ET) and Jefferson (1:30 p.m. ET). And given the hawkish shift in Fed rate hike odds over the last few days, a more dovish leaning tone from any of the policy makers would be well received.
Finally, the House is set to vote on the debt limit bill today and Republican Representatives have said this morning that they have the votes to pass it. If that comes to fruition, that should remove a headwind from risk assets and open the door to a continued move higher in equity markets.
What’s in Today’s Report:
S&P 500 futures are solidly higher while Nasdaq futures surge 2% thanks to blow out NVDA earnings.
NVDA beat on revenue and EPS and raised guidance on strong AI chip demand, and the stock surged more than 20% after hours.
Fitch put the U.S. on “credit watch negative” as the potential “X” date for the debt ceiling is less than a week away.
Today focus will be on any debt ceiling progress (although none is expected with the looming holiday weekend) and on economic data, and the most important report is Jobless Claims (E: 248K) and markets will want to see that number flat or just slightly higher (another big jump would increase hard landing worries).
Other data today includes Revised Q1 GDP (E: 1.1%) and Pending Home Sales (E: 1.1%), but neither number should move markets. On the Fed, we have two speakers today, Barkin (9:50 a.m. ET) and Collins (10:30 a.m. ET), but neither should move markets.
The natural-gas market is reaching a historically pivotal phase of the year, with the price swings typically occurring in the summer and winter months, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed despite a lack of progress on the debt ceiling and an increase in trade tensions between the U.S. and China over the weekend.
There was no progress on the debt ceiling over the weekend although Biden and McCarthy will meet again today to resume negotiations.
China banned the use of Micron (MU) chips in what is yet another escalation in U.S./China trade tensions.
Today focus will be on the debt ceiling and markets will want to hear positive and optimistic commentary from Biden and McCarthy, as the potential “X” date of June 1st is now less than 10 days away.
There are also multiple Fed speakers today, including Bullard (8:30 a.m. ET), Logan (9:00 a.m. ET), Barking & Bostic (10:50 a.m. ET) and Daly (11:05 a.m. ET), but given Powell on Friday reiterated the Fed has likely paused, their comments shouldn’t move markets.
What’s in Today’s Report:
Stock futures are rebounding modestly from yesterday’s declines this morning as traders await more clarity on the debt ceiling negotiations (1-Month yield is down 2 bp to 5.56%) and digest in-line European inflation data.
Economically, Eurozone HICP (their CPI equivalent) met estimates at 7.0% y/y with the Narrow Core reading falling 0.1% to 5.6%, also as expected but still well above target.
There is just one economic report this morning: Housing Starts & Permits (E: 1.405M, 1.430M) and no Fed officials are scheduled to speak.
Retailer earnings continue this morning with TGT ($1.74) reporting ahead of the bell and investors will be looking for more signs of “soft landing” spending trends as we saw with HD yesterday.
As far as other potential catalysts go, there is a 20-Yr. Treasury Bond auction at 1:00 p.m. ET today and any big move in yields could impact stocks (too weak would indicate inflation worries, too strong would underscore growing debt ceiling fears).
What’s in Today’s Report:
Stock futures are slightly lower this morning as traders digest disappointing economic data from overseas and look ahead to today’s debt ceiling negotiations.
Economically, Chinese Fixed Asset Investment slowed in April while Industrial Production came in at just 5.6% vs. (E) 10.7% and Retail Sales rose to 18.4% vs. (E) 22.0%. The underwhelming data is continuing to pour some cold water on hopes that a robust recovery in China will help support broader growth in the global economy this year.
Looking into today’s session there are several economic releases to watch in the U.S. including (in order of importance): Retail Sales (E: 0.7%), Industrial Production (E: 0.0%), and the Housing Market Index (E: 45). Specifically, if Retail Sales is disappointing, that could rekindle hard-landing fears and pressure stocks.
Several Fed officials are also expected to speak today: Mester (8:15 a.m. ET), Bostic (8:55 a.m. ET), Williams (12:15 p.m. ET), and Logan (3:15 p.m. ET). A more cautious tone regarding policy plans would be welcomed while any decidedly hawkish commentary is likely to pressure markets.
Finally, the main focus today will be the debt ceiling talks between the Biden Administration and House Republicans as we are fast approaching the “X date” and prospects of a deal being reached remain very uncertain. Any reported progress on the topic will be well-received today and likely result in a modest relief rally but if concerns about the debt ceiling increase, expect equities to come under pressure.
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What’s in Today’s Report:
Futures are modestly higher following reports of progress on the debt ceiling negotiations over the weekend.
Another debt ceiling meeting is scheduled for Tuesday at the White House and major officials (including Biden and Yellen) stated progress was made in negotiations over the weekend, although a deal still isn’t likely this week.
Economically, Euro Zone IP slightly missed estimates.
Today there’s only one notable economic report, the May Empire Manufacturing Index (E: -3.70), and markets will want to see stability in the data to further hint towards a soft landing.
Looking at the Fed, there are numerous speakers today including Bostic (8:45 a.m. ET), Kashkari (9:15 a.m. ET), Barkin (12:30 p.m. ET) and Cook (5:00 p.m. ET) and while their comments may have a hawkish tone, the market firmly believes the Fed has paused on rate hikes and it’ll take Powell disavowing that notion for investors to reconsider.
Finally, debt ceiling headlines will likely continue, and don’t be shocked if there’s some pushback on the “progress” narrative from the weekend as the political gamesmanship kicks into high gear, with just over two weeks till the “X” date.