Numbers this strong would likely reverse any hopes the Fed would consider a pause in rate hikes after the June/July increases, because it would signal the labor market remains very tight…Tom Essaye of the Sevens Report said. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed following a quiet night of news.
Economic data was mixed as final May manufacturing PMIs were in-line with expectations for the EU and UK, although German Retail Sales missed estimates (–5.4% vs. (E) -0.1%).
On the Fed front, Bostic said his comments about a “pause” on rate hikes shouldn’t be interpreted that the Fed will help rescue volatile markets.
Today focus will be on economic data and Fed speak via the ISM Manufacturing PMI (E: 54.5), JOLTS (E: 11.40M) and comments by Williams (11:30 a.m. ET) and Bullard (1:00 p.m. ET). Bottom line, the ideas of slowly moderating (but not collapsing) growth and the possibility for a Fed “pause” in rate hikes in late summer/early fall have helped stocks rally, and as long as today’s data and Fed speak don’t refute those possibilities, stocks can extend the recent rally.
What’s in Today’s Report:
Stock futures are moderately lower this morning, tracking losses in EU shares amid renewed inflation concerns.
German CPI jumped to 7.9% vs. (E) 7.5% and the Eurozone HICP Flash rose to 8.1% vs. (E) 7.7% in May. Additionally, the EU agreed to a partial ban on Russian energy imports which has sent oil to multi-month highs, compounding inflation fears this morning.
Looking into today’s session, there are three economic reports due to be released: Case-Shiller Home Price Index (E: 2.2%), FHFA HPI (E: 1.9%), and Consumer Confidence (E: 104.0). Investors will want to see the latter report at least meet estimates as the health of the U.S. consumer has become less certain in the face of lofty inflation pressures.
Finally, there are no Fed officials speaking today but Powell is set to meet with Biden at the White House at 1:15 p.m. ET. And following Waller’s more hawkish comments about suggesting 50 bp hikes until inflation is back at 2% from yesterday, any insight to the Fed’s policy plans after the summer rate hikes, which are solidly priced in, will move markets (more aggressive policy expectations could hit stocks today).
This two-day rally in the market is mostly built on the premise that the Fed may ‘pause’ rate hikes after the two 50-bps adjustments this summer…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly higher as incrementally positive macro news offset more disappointing tech earnings.
Nvidia earnings underwhelmed and the stock fell 5% after hours, and that is weighing on tech this morning.
But, not as hawkish as feared in FOMC minutes and the continued reopening of Shanghai offset the soft NVDA earnings.
Today’s focus will be on economic data via the Revised Q1 GDP (-1.4%), Jobless Claims (E: 208K), and Pending Home Sales (E: -1.3%). Given the recent weakness in other economic data, the market will want to see stability in the numbers to continue to push back on stagflation concerns.
What’s in Today’s Report:
Futures are moderately higher mostly on momentum from Friday’s rebound following a generally quiet weekend.
COVID news from China remains mixed as Shanghai continues to relax lockdowns although Beijing is seeing a continued increase in cases (keeping the threat of more lockdowns alive).
The dollar is down one percent after ECB President Lagarde signaled two rate hikes were likely in the 3rd quarter (this was a bit more hawkish than expected).
Today there are no notable economic reports and just one Fed speaker, Bostic (12:00 p.m. ET). If Bostic echoes Bullard’s slightly less hawkish than feared commentary from Friday afternoon, then stocks can extend Friday’s rebound.
What’s in Today’s Report:
There is a clear risk-on tone in markets this morning with stock futures sharply higher amid optimism that China will ease regulation on the tech sector (the Hang Seng rallied 3%) while economic data surprised to the upside.
Economically, the Q1 Eurozone GDP Flash came in at 5.1% vs. (E) 5.0% Y/Y which helped ease recently elevated concerns about global growth which may have been overdone.
Looking into today’s session, focus will be on economic data early with several reports due to be released including: Retail Sales (E: 0.7%), Industrial Production (E: 0.4%), Housing Market Index (E: 75). Investors will be looking for solid data that helps further ease fears about a potential slowdown in the economy.
There are also multiple Fed speakers today: Harker (9:15 a.m. ET), Powell (2:00 p.m. ET), Mester (2:30 p.m. ET), and Evans (6:45 p.m. ET). Powell will be the main focus but the market will want to see officials collectively strike a less hawkish tone if we are going to see these early gains in equities hold.
Bottom line, the overnight rally in equity futures came on very light volume and it should not be surprising to see the market gravitate back towards yesterday’s levels this morning as investors assess the new economic data and slew of Fed speakers. But with good news flow, we could see the relief rally resume today.
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What’s in Today’s Report:
Futures are moderately lower mostly on momentum from Wednesday’s afternoon selloff.
Economically, UK economic data disappointed (GDP and Industrial Production both missed estimates) while BOE officials warned of more rate hikes reminding markets there’s a real stagflation threat in the UK.
Geo-politically, Finland formally applied to join NATO (and Sweden is expected to follow), keeping NATO/Russia tensions high for the foreseeable future (meaning quarters and years).
Today, we get Jobless Claims (E: 190K) and PPI (0.5% m/m, 10.7% y/y) and one Fed speaker, Daly (4:00 p.m. ET), but barring a big spike in claims, a big move in PPI or incrementally hawkish commentary from Daly (all of which are unlikely) these events won’t move markets. So, short-term technical will continue to be the main driver of stocks, and markets need to show some stabilization, otherwise, the declines themselves will invite more selling.
What’s in Today’s Report:
There is a tentative sense of relief in markets this morning with stock futures tracking global equities higher while bond yields and the dollar pullback ahead of key inflation data in the U.S. today.
Economically, Chinese CPI and PPI were both hotter-than-expected however German CPI met estimates of 7.4% y/y which is giving investors hope that price pressures are still high but in the process of peaking.
Looking into today’s session investors will be primarily focused on the CPI report (E: 0.2% m/m, 8.1% y/y), and more specifically the Core CPI figures (E: 0.4% m/m, 6.0% y/y).
We will also hear from one Fed speaker: Bostic (12:00 p.m. ET), and there is a 10-Yr Treasury Note auction at 1:00 p.m. ET.
Bottom line, if today’s inflation data comes in below expectations, it will likely bolster this morning’s already solid gains in stock futures and lead to a further relief rally. Conversely, if inflation runs hot, expect more volatility across asset classes and the potential for new lows in the major equity indices.
To start the year, we knew that central bank tightening would make for a challenging market, but that has been compounded by two surprise events: The Russia/Ukraine war (no one expected that in January) and Chinese lock-downs (it’s quasi-shocking the Chinese are still adopting these policies and crushing their economy)…wrote Tom Essaye of The Sevens Report. Click here to read the full article.