We must acknowledge the challenges ahead, and be ready with a plan to insulate ourselves from volatility and protect portfolios…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher following good economic data and as oil didn’t continue Wednesday’s rally (at least not overnight).
Economic data was solid as both the March EU Flash Composite PMI (54.5 vs. (E) 54.1.) and the UK Flash Composite PMI (59.7 vs. (E) 58.7) beat estimates, implying the Russia/Ukraine war wasn’t materially slowing growth.
Today focus will be on economic data, specifically the March Flash PMIs (E: 56.7). With inflation still high and the Fed threatening a 50 bps hike in May, the PMIs need to give markets a “goldilocks” number to extend the early rally, as a “Too Hot” number will invite even more Fed tightening, while a “Too Cold” number will increase stagflation risks. Outside of the PMIs, we also get Jobless Claims (210K) and Durable Goods (E: -0.5%) although they shouldn’t move markets.
From the Fed today we get Kashkari (8:30 a.m. ET), Waller (9:10 a.m. ET) and Bostic (11:00 a.m. ET) and of the three, Waller is the most important (he’s Fed leadership and if he hints at a 50 bp hike expect that to mildly weigh on stocks).
The market has, to a degree, called the Fed’s bluff on rate hike plans as rate hike expectations were dialed back in the immediate wake of the dot plot release and economic projections, but the Fed is indeed tightening policy and regardless of the pace of the trend, yields are going higher in the months and quarters ahead, said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures are modestly lower with EU shares this morning as traders digest the strong post-Fed rally amid hawkish Fed speak and still elevated tensions surrounding Ukraine.
Geopolitically, talks of new sanctions on Russia by the West, including on the energy sector, are acting as a mild headwind on risk assets today.
Economically, the latest U.K. inflation data ran hot with CPI jumping to 6.2% vs. (E) 5.9% in February, a fresh 30-year high.
Today, there is one economic report due out: New Home Sales (E: 810K) but it shouldn’t move markets leaving focus on the Fed as Chair Powell is scheduled to speak at 8:00 a.m. ET. Loretta Mester and Mary Daly will also speak at 10:00 a.m. ET and 11:45 a.m. ET, respectively.
Finally, there is a 20-Year Bond auction at 1:00 p.m. ET that could move Treasury yields.
Bottom line, stocks are showing some signs of exhaustion after a strong one-week rally in the wake of the March Fed meeting, and any additionally hawkish Fed speak or negative news flow surrounding the Ukraine war could see the selling pressure pick up as near term traders book profits on recent gains.
What’s in Today’s Report:
Stock futures are cautiously higher this morning after a mostly quiet night of news as traders continue to digest Powell’s more hawkish tone from yesterday and monitor a lack of progress towards a ceasefire in Ukraine.
Bond yields are continuing to rise today with the 2-year up another 4 basis points which is pressuring the yield curve. The 10s-2s is down to just 16 basis points this morning.
There was no market-moving economic data overnight and no notable reports are due out today. There is one Fed speaker: Williams (10:30 a.m. ET) and the Treasury will hold a 52-Week Bill auction at 1:00 p.m. ET.
Bottom line, equities have shown resilience in the face of the surge in yields since last week’s Fed meeting, however, if we see yields accelerate higher again today like we did yesterday, it will be increasingly difficult for stocks to extend their recent rally. Any concrete, positive news out of Ukraine could help stocks overcome higher yields in the near term and move higher though.
What’s in Today’s Report:
Futures are moderately higher on growing optimism for a sooner than later cease-fire in the Russia/Ukraine war.
Reuters quoted Putin as stating there had been “certain positive shifts” in the negotiations for a cease-fire, although the fighting continued and an imminent cease-fire is unlikely.
Economic data was sparse but generally fine. German CPI met expectations at 5.1% yoy while UK Industrial Production rose 0.7% vs. (E) 0.1%.
Today there is only one economic report, Consumer Sentiment (E: 61.7), and the inflation expectations index within the report will be important because if five-year inflation expectations move sharply above 3%, that will get the Fed’s attention and possibly make them more hawkish.
Outside of that report, focus will remain on Russia/Ukraine and if we get any additional hints at a cease-fire, it will extend this morning rally.
What’s in Today’s Report:
Futures are moderately lower as a meeting between the Russian and Ukrainian foreign ministers yielded no additional progress towards peace.
Russia and Ukraine’s foreign ministers met in Turkey for over an hour, but there were no tangible breakthroughs made towards a lasting case-fire.
That lack of progress aside, the tone of the meeting was partially positive and a path towards peace appears to be slowly forming.
Today focus will be on the ECB Announcement (7:45 a.m. ET, press conference at 8:30 a.m. ET) and CPI (E: 0.7% m/m, 7.9% y/y).
Regarding the ECB, the key question is “how dovish is Lagarde?” in her comments, given the economic risks to Europe from the war. The market has priced in that she will be quite dovish, so there is a risk of a mildly hawkish surprise.
Regarding inflation, the number to watch is 8%. If CPI prints above 8% y/y, that will show inflation pressures are not receding and given exploding commodity prices, that means higher inflation for longer, which will likely make the Fed more aggressive on rate hikes (although a 50 bps hike next week is still unlikely).
Finally, we also get Jobless Claims (E: 218K) but that’s shouldn’t move markets,
What’s in Today’s Report:
U.S. futures fell sharply overnight following Russia’s threat to shut the Nord Stream 1 pipeline and the U.S. expressing a willingness to ban imports of Russian oil. But reports of successful evacuations from Ukraine through a corridor agreed upon with Russia has sparked risk on money flows in pre-market trading.
Economic data in Europe was generally good o/n with German Industrial production topping estimates while Eurozone GDP met expectations. Domestically, the NFIB Small Business Optimism Index fell to 95.7 vs. (E) 97.1.
Today, there is one economic report to watch: International Trade in Goods & Services (E: -$84.0B), however, it should not move markets, while the Treasury will hold a 3-Yr Note auction at 1:00 p.m. ET.
Bottom line, the market is attempting to stabilize this morning following yesterday’s route, but for the market to bounce further, we will need to see meaningful de-escalation between Russia and Ukraine over the course of the day.
What’s in Today’s Report:
Futures are sharply lower as oil spiked more than 6% (above $120/bbl) overnight on multiple reports the West is actively considering an embargo on Russian oil and gas.
Geopolitically, there were attempts at localized cease-fires in southern Ukraine to allow citizens to flee the cities, but those efforts have been, so far, a failure. More peace talks are scheduled for today although not much progress is expected.
Economic data was solid as German Manufacturers’ Orders and Retail Sales both beat estimates, but that’s not moving markets.
Today there are no notable economic reports and no Fed speakers, so oil and geopolitics will continue to move markets. If oil continues to rally throughout the day, that will further pressure stocks and it’ll take meaningful progress on a cease-fire to help markets rebound (and that doesn’t seem likely, at least not today).
Bottom line, inflation remains the single biggest potential influence over Fed policy, and Fed policy will determine whether stocks continue to rally, or decline…said Tom Essaye, founder of the Sevens Report. Click here to read the full article.
