Analyst Tom Essaye of the Sevens Report said investors will want to see such signs of easing demand—and a more rapid decline in inflation metrics—in order to continue the recent relief rally. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest the implications of Friday’s strong jobs report following a mostly quiet weekend.
Friday’s jobs report won’t make the Fed any more hawkish, but it’ll keep stocks facing a dual headwind of aggressive Fed and earnings pressure, and that’s weighing on futures.
There were no notable economic reports overnight.
Today is Columbus Day so there are no economic reports while the banks and bond market will be closed, likely leading to slow trading in stocks. There is one Fed speaker, Evans (9:00 a.m. ET), but he shouldn’t move markets (at this point it’s well-known what the Fed plans to do).
What’s in Today’s Report:
Futures are slightly lower as the looming jobs report helps offset soft economic data and disappointing earnings.
Economically, German Industrial Production, German Retail Sales, and Japanese Household spending all missed estimates.
On earnings, AMD became the latest widely held company to miss earnings, positing a material revenue shortfall.
Today focus will be on the Jobs Report and expectations are as follows: Job Adds: 250K, UE Rate 3.7%, Wages 0.3% m/m, 5.1% y/y. If the numbers are in the lower end of the “Just Right” range that will spur more hopes of a Fed pivot between now and year-end, and stocks will likely rally. Away from the jobs report there are also several Fed speakers including: Williams (10:00 a.m. ET), Kashkari (11:00 a.m. ET) and Bostic (12:00 p.m. ET) but they shouldn’t move markets (expect them to be hawkish in tone but not say anything new).
What’s in Today’s Report:
Stock futures are down roughly 1% this morning as investors digest the sizeable week-to-date gains amid rebounds in Treasury yields and the dollar.
Looking overseas, the Reserve Bank of New Zealand raised rates 50 bps overnight, meeting consensus expectations while the Eurozone Composite PMI came in at 48.1 vs. (E) 48.2.
Today, the focus will be on economic data early with the ADP Employment Report (E: 200K) due out before the bell as well as data on International Trade in Goods and Services (E: -$68.0B), and then the ISM Services Index (E: 56.0).
There is also one Fed official scheduled to speak in the afternoon: Bostic (4:00 p.m. ET).
Bottom line, most of this week’s gains have been a function of renewed “peak-hawkishness” hopes however if economic data comes in stronger than expected and we see yields turn back higher and the dollar resume its rally, then we could see stocks give back some of this week’s rally which has admittedly occurred at an unsustainable pace.
What’s in Today’s Report:
U.S. stock futures and European equities are solidly higher this morning while bond yields continue to pull back with the dollar amid renewed hopes of a “less-hawkish pivot” by global central banks.
The RBA was seen as dovish overnight, raising their policy rate by 25 basis points vs. (E) 50 bp which is helping pressure global bond yields and support continued risk-on money flows this morning.
Economically, EU PPI rose to 5.0% vs. (E) 4.9% in August but the fact that the print was not a “hotter” surprise is also adding a tailwind to global equities this morning.
Today, there are two economic reports to watch: Factory Orders (E: 0.2%) and JOLTS (11.150M) and multiple Fed officials speaking: Williams (9:00 a.m. ET), Logan (9:00 a.m. ET), Mester (9:15 a.m. ET), Jefferson (11:45 a.m. ET), and Daly (1:00 p.m. ET).
As long as the pullback in bond yields and the dollar continue over the course of the day, stocks should be able to extend yesterday’s gains however the pace of the early quarter rebound has approached an unsustainable level and at some point, we will need to see some consolidation across asset classes.
What’s in Today’s Report:
Stock futures are trading cautiously higher while yields and the dollar ease from yesterday’s highs after the Fed’s Evans made some less hawkish commentary overnight.
While speaking on “Squawk Box Europe” early this morning, Charles Evans said he was getting nervous about the Fed’s pace of tightening and that if inflation peaks, the FOMC could cut rates as soon as early 2023 which has sparked a relief rally across risk assets amid renewed hopes for “peak hawkishness.”
Economically, Chinese Industrial Profits declined -2.2% in August from -1.1% in July but slowing global growth is largely priced into the market at this point.
Looking into today’s session there are multiple economic reports to watch including: Durable Goods (E: -1.2%), S&P Case-Shiller Home Price Index (E: 0.3%), New Home Sales (E: 498K), and Consumer Confidence (E: 104.3). Investors will be continuing to look for slowing growth, a moderating labor market and most importantly any further signs of easing price pressures as those are all necessary components in getting the Fed to “peak hawkishness.”
Regarding the Fed, there are several officials speaking today: Powell (7:30 a.m. ET), Daly (8:35 a.m. ET), and Bullard (9:55 a.m. ET). And while it is unlikely any of them echo Evans’ dovish tone form earlier this morning, if they do come across as less hawkish, we could see a violent relief rally play out as stocks have become oversold in recent sessions.
“We continue to believe that the oil market is in the process of finding its footing, However, a hawkish Fed this week could further stoke fears of a hard landing and spur a continued rally in the dollar, which would surely see the recent lows near $80/barrel tested into the weekend,” said analysts at Sevens Report Research, in a Tuesday newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower as global yields continued to climb while economic data was largely disappointing.
September flash PMIs showed contraction in the EU (48.2) and the UK (48.4) as signs of a global slowdown grow.
The UK government announced a fiscal stimulus package but the news is spiking UK bond yields and pressuring the Pound as markets view it as inflationary.
Today we get speeches from Powell (2:00 p.m. ET) and Brainard, but don’t expect their message to be any different then what was just said at Wednesday’s FOMC meeting. Beyond the Fed speak, the key economic report today is the September Flash Composite PMI (E: 47.0) and this data points needs to largely meet expectations, because a strong number will push yields higher, while a weak number will increase stagflation concerns.
What’s in Today’s Report:
Futures are little changed as markets digested yet another hawkish Fed decision amidst more global rate hikes.
The overnight session was mostly quiet as investors digested the Fed rate hike while other global central banks raised rates (five separate central banks hiked rates overnight, as expected).
The Bank of Japan intervened in the currency markets for the first time since 1998, causing a 1% rally in the yen.
Today focus will be on the Bank of England Rate Decision (E: 50 bps hike) and on weekly Jobless Claims (E: 220K). Fed Chair Powell again highlighted that the labor market is still much too tight, so markets need these jobless claims to start to rise towards 300k to prevent even further Fed tightening in the future. The sooner the labor market returns to better balance, the sooner we get to “peak hawkishness.”
From a Fed standpoint, obviously they cannot even think about stopping until this [inflation] number gets down to something more tenable…said Tom Essaye, a trader and founder of financial research firm The Sevens Report. Click here to read the full article.
