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FOMC Preview (Watch the Dots)

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What’s in Today’s Report:

  • FOMC Preview (Watch the Dots)
  • Why Yesterday’s CPI Boosted the “Growth On” Trade
  • Gold Update:  Are the 2023 Highs Already In?

Futures are modestly higher following a quiet night of news as markets look ahead to the FOMC decision and expected pause in rate hikes.

Economic data was mixed overnight as UK Industrial Production missed estimates (-0.3% vs. (E) -0.1% in manufacturing) while Euro Zone IP slightly beat (1.0% vs. (E) 0.9%), but neither number is moving markets.

Today focus will be on the FOMC Decision and the consensus expectation is that the Fed will pause.  But, it’s not clear how many additional 2023 rate hikes the “dots” will show, and that will determine if the Fed decision is hawkish or dovish (more on that inside).

Away from the Fed we also get the May PPI (E: -0.1% m/m, 1.6% y/y) and Core PPI (E: 0.2% m/m, 2.9% y/y) and if this metric comes in under expectations that’ll boost the “Immaculate Disinflation” expectation and should help cyclical sectors extend the rally.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Chart: Nasdaq Composite Emerges from Correction

Stock futures are little changed this morning as yesterday’s record close is digested while investors look ahead to a very busy day of earnings and the start of the Fed meeting.

There are a slew of potential market catalysts today. Starting with economic data, there are two housing market reports: Case-Shiller Home Price Index (E: 1.1%), FHFA House Price Index (E: 0.9%), before Consumer Confidence (E: 112.0) will be released (the latter will be most important to watch).

Additionally, the April FOMC Meeting Begins however that will not impact markets until tomorrow’s announcement and Powell’s press conference in the afternoon.

There is also a 7-Yr Treasury Note Auction at 1:00 p.m. ET and while the March auction was generally orderly, the February 7-Yr auction caused double-digit basis-point swings across the curve so any bond market volatility in the wake of the auction could influence equity trading.

Finally, it is a very busy day on the earnings front with UPS ($1.63), GE ($0.01), MMM ($2.25), BP ($0.43), SHW ($1.65), and SYF ($1.50) reporting before the open and AMD ($0.44), MSFT ($1.76), GOOGL ($15.50), V ($1.27), and COF ($4.17) releasing quarterly results after the closing bell.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview

U.S. equity futures are little changed this morning as yesterday’s late day sprint to fresh records is digested ahead of the Fed meeting while bond markets remain calm.

Economically, Germany’s March ZEW Survey came in slightly better than expected which is supporting modest risk on money flows in both European and U.S. markets.

From a potential catalyst standpoint, it is lining up to be a busy morning with several notable economic reports due to be released including: Retail Sales (E: -0.5%), Import & Export Prices (E: 1.0%, 1.0%) and Industrial Production (E: 0.5%).

However with the FOMC meeting beginning today, there will likely be some degree of “Fed paralysis” that limits the market’s reaction to any of this morning’s data points.

One thing that could move markets despite focus already shifting to the Fed is the 20-Yr Treasury Bond Auction at 1:00 p.m. ET today as a disappointing auction could trigger another spike in yields which would in turn weigh on stocks, particularly the tech sector.

FOMC Preview

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What’s in Today’s Report:

  • What the GameStop Drama Means for Markets
  • FOMC Preview

Stock futures are modestly lower this morning as yesterday’s volatile start to the week is digested while investors look ahead to the Fed meeting and a busy earnings week.

Volatility remained elevated overnight as the PBOC unexpectedly withdrew liquidity from the Chinese financial system while the U.K. unemployment rate hit a 5 year high.

Looking into today’s session, there are two measures of the health of the real estate market due out before the market opens: Case-Shiller Home Price Index (E: 0.8%) and FHFA House Price Index (E: 0.8%), and then Consumer Confidence (E: 88.5) will print shortly after the opening bell.

On the earnings front, the Q4 reporting season picks up today with several notable companies reporting quarterly results pre-market including: JNJ ($1.81), MMM ($2.19), GE ($0.08), VZ ($1.16), and AXP ($1.26), while MSFT ($1.64), AMD ($0.47), and COF ($2.85) will report after the close.

With the FOMC meeting beginning today and more mega-cap tech earnings due later in the week, it is likely we see some sense of “Fed paralysis” in the market as traders reposition into the middle of the week.

FOMC Preview (What Makes It Dovish Enough?)

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What’s in Today’s Report:

  • FOMC Preview (What Will Make It Dovish Enough for the Market?)
  • Why Did Stocks Rally on Monday?

Futures are moderately higher again following better than expected economic data overnight.

Chinese economic data was solid as August Retail Sales (0.5% vs. (E) 0.1%) and Industrial Production (5.6% vs. (E) 5.1%) both beat estimates.  In Europe, the German ZEW expectations index also beat estimates (77.4 vs. (E) 69.5).  Bottom line, the data implies the global economic recovery is still on going.

On the vaccine front, headlines were more mixed as the resumption of the AZN trial in the U.S. isn’t expected until the middle of this week, at the earliest.  But, markets still very much expect a vaccine to be approved by Election Day and distributed by year-end (and that remains a very optimistic assumption).

Today the looming Fed meeting (tomorrow) should keep the markets generally quiet, although we do get the September Empire Manufacturing Survey (E: 6.5), which is the first data point for September.  If it’s stronger than expected, that will further confirm the U.S. economy remains resilient despite no more stimulus, and that will help support the early rally in futures.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview (What’s Expected/Dovish If/Hawkish If)

Futures are modestly lower following a quiet night of news as markets digest yesterday’s rally ahead of several days of critical earnings and tomorrow’s FOMC decision.

Economic data was sparse.  UK CBI Distributive Trades (it’s like retail sales) beat estimates rising to 4 vs. (E) -25 but the number isn’t moving markets.

Today there are only two notable economic reports,  Case-Shiller HPI (E: 4.2% yoy) and Consumer Confidence (E: 95.7) and neither should move markets.

Instead, focus will be on stimulus (negotiations will accelerate and the market expects a done deal in two weeks) and earnings.  Specifically, the volume of important earnings reports spikes between now and Friday, so we’ll be watching these results closely (especially the reports on Thursday).  Today, some notable earnings include:  MMM ($1.77), MCD ($0.76), PFE ($0.64), AMD ($0.16), SBUX ($-0.61), V ($1.02).

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview (Wildcard to Watch)
  • What Do Rising Treasury Yields Really Mean?

S&P 500 futures are down roughly 1% this morning tracking European shares lower after German trade data showed a much larger than anticipated drop in exports during the depths of the COVID-19 pandemic in April.

Eurozone GDP and the NFIB Small Business Optimism Index slightly beat expectations however German exports declined by the most on record in April, tumbling by -24.0% on the month which is weighing heavily on EU shares today.

Looking into today’s session, there are two lesser followed economic reports due to be released: April JOLTS (E: 5.750M) and Wholesale Trade (E: 0.4%) which are not likely to move markets while there are no Fed speakers as the June FOMC Meeting Begins today.

With tomorrow’s Fed announcement and Powell’s press conference coming into focus, it is possible we see a continued wave of profit taking today, especially given the disappointing economic data out of Europe, however a sense of “Fed paralysis” should keep the losses somewhat limited.

Fed Meeting Preview

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What’s in Today’s Report:

  • FOMC Preview

S&P futures are up 1% this morning, tracking European shares higher as economies around the globe begin to reopen while investor focus shifts ahead to the slew of earnings releases in the coming days as well as multiple central bank meetings this week.

Coronavirus headlines were mostly positive overnight as there were reports of expanded testing capabilities in the U.S., the growth rate of new cases continues to slow in the U.S., and states across the country are beginning the process of lifting COVID-19 containment policies.

The FOMC meeting begins today (concluding tomorrow) while there are a few notable economic reports to watch this morning: International Trade in Goods (E: -%51.5B), S&P CoreLogic Case-Shiller HPI (E: 0.4%), and Consumer Confidence (E: 95.0).

Investors will be increasingly focused on earnings this week as we approach the peak of the Q1 reporting season.

There are several major corporations, from manufacturing to tech sectors, releasing results today including: MMM ($2.02), PEP ($ 1.02), PFE ($0.71), UPS ($1.23), CAT ($1.77), MRK ($1.39), LUV (-$0.48), BP ($0.28),  AMD ($0.18), GOOGL ($10.97), F (-$0.10), CHRW ($0.71).

Fed Preview and Key Levels to Watch in Yields

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What’s in Today’s Report:

  • FOMC Preview
  • Did Dr. Copper Just Offer an All-Clear Signal?
  • Key Levels that Will Tell Us, in Real-Time, Whether Events this Week Are Positive or Negative for Stocks

Global markets are trading with a notable risk-off tone this morning as investors position into several key events later this week including the Fed and ECB announcements and next Sunday’s deadline for more U.S. tariffs on China.

Economic data overnight was positive as the Current Conditions and Business Expectations components of the German ZEW Survey were better than feared while the NFIB Small Business Optimism Index was 104.7 vs. (E) 102.9.

Looking into today’s session, thing should be quiet with the December Fed meeting getting underway however there is one economic report to watch: Productivity and Costs (E: -0.2%, 3.5%) and there is a 10 Year T-Note Auction at 1:00 p.m. ET this afternoon. If the auction triggers a significant reaction in yields, that will affect stocks.

There have not been any notable developments on the trade war this week and “no news is bad news” right now given the looming Dec. 15th deadline for the U.S. to add more tariffs to Chinese imports. As a result, the market will continue to look for any clues regarding progress towards a “phase one deal” that will avoid additional tariffs and potentially roll back existing ones.

Fed Meeting Preview

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What’s in Today’s Report:

  • FOMC Preview

Stock futures are slightly lower and bonds are rising modestly as investors digest yesterday’s new all-time highs in the S&P, eye Brexit developments, and position ahead of the week’s long list of catalysts.

British PM Boris Johnson is making a new push for a general election in early December, increasing the odds of a no-deal Brexit which is weighing on stocks this morning.

There are a few economic reports to watch this morning including S&P Case-Shiller HPI (-0.1%), Consumer Confidence (E: 128.6), and Pending Home Sales (E: -0.2%) but the market’s reaction is expected to be limited as the FOMC meeting begins which will likely lead to a degree of “trader paralysis” today.

Meanwhile, earnings season remains in full swing and there are several notable reports due today which could influence sector trading:  MA ($2.01), MRK ($1.25), PFE ($0.63), GM ($1.31), AMD ($0.18), and AMGN ($3.51).