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An Important Few Weeks for Bonds

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What’s in Today’s Report:

  • Why The Next Few Weeks Are Critical for the Bond Market
  • Weekly Market Preview:  Earnings Season Starts
  • Weekly Economic Cheat Sheet:  Inflation This Week

Futures are slightly lower following a very quiet weekend of news as markets wait for the start of earnings this week along with updated inflation data.

G-20 finance ministers agreed to move forward with a plan for a global minimum tax, but this remains a very, very long way from actual implementation.

China’s reserve requirement ratio cut remained top of the news but it’s unlikely to provide major stimulus and as such it’s not a material bullish catalyst for global stocks.

Today there are no economic reports and just two Fed speakers: Williams (9:30 a.m. ET) and Kashkari (12:00 p.m. ET).  As was the case last week, we expect yields to dictate trading in stocks, so if Treasury yields continue to bounce, stocks should extend Friday’s rally.

G-20 Preview (What It Will Mean for Stocks)

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What’s in Today’s Report:

  • G-20 Preview (What’s Expected, Bullish If, Bearish If, and Market Reactions)
  • Oil Update – A Bullish Inventory Number (And a Major Gasoline Supply Disruption)

Futures are marginally higher again and this morning is largely a repeat of Wednesday morning as a news article that is positive on U.S.—China trade in tone, yet offers no new information, is causing a mild rally.

The South China Morning Post (a government media source) posted an article stating the U.S. and China will reach a temporary trade “truce” at the G-20.

Economic data was sparse and is not moving markets.

Today we do get some notable economic reports, including Final Q1 GDP (E: 3.1%), Jobless Claims (E: 218K) and Pending Home Sales (E: 0.6%).

The GDP report will get the most attention but the claims data is the most important release today, but that said none of these reports should move markets.  Instead, we will continue to be glued to the scrolling ticker for any reports or updates on what’s expected at the G-20, as that event continues to hover like a cloud over all markets this week.

Trump/Xi Meeting Preview

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What’s in Today’s Report:

  • G-20 Preview:  The Good, the Expected & the Ugly

Futures are modestly lower on positioning ahead of the G-20 and due to disappointing foreign economic data.

Regarding the G-20, there was no new news overnight, and the expectation remains for a trade war “truce.”

Economic data was disappointing.  Chinese Nov. Manufacturing PMI dropped to 50.0 vs. (E) 50.2, the lowest since mid-2016.  EU inflation also underwhelmed as the core flash HICP rose 1.0% y/y vs. (E) 1.1% y/y.  So, despite some decent data this week, “ROW” (rest of world) economic activity remains underwhelming.

There are no economic reports today and just one Fed speaker, Williams (1:00 p.m. ET), but he won’t move markets.  So, markets should be in a general holding pattern ahead of the G-20 and I’d expect a quiet day.  That said, there has been a constant flow of headlines on the potential outcome of the Trump/Xi meeting, so we’ll continue to watch the headlines for any headline surprises that could cause volatility.