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Was Powell’s Speech a Bullish Gamechanger?

What’s in Today’s Report:

  • Was Powell’s Speech a Bullish Gamechanger?  No.
  • Oil Update – Another Bearish Report
  • The Unexpected Winner from Powell’s Speech (Yield Curve)

Futures are modestly lower on digestion of yesterday’s rally combined with worries about potential auto tariffs.

Rhetoric on U.S. auto tariffs continues to get louder and there is a growing fear they will be enacted this year.  That is not the consensus expectation at this point, but it’s not an insignificant (and it would be a new negative for stocks).

Economic data o/n was better than expected as Japanese Retail Sales, German Unemployment and EU Economic Sentiment all beat estimates.

Today focus will be on economic data, and the most important report will be the Core PCE Price Index (E: 1.9%).  That number needs to stick near 2.0% yoy to allow the Fed to continue to tilt dovish.  Other notable data today includes Jobless Claims (E: 219K) and Pending Home Sales Index (E: 0.3%).   There are also three Fed speakers today, (Mester and Evans (2:00 p.m. ET), Kaplan (3:00 p.m. ET)) although none should move markets given the Powell comments.

Finally, we can expect more preview articles about the Trump/Xi meeting but the bottom line is the market expects (and has priced in) a “truce” that sees no new tariffs and a period of intense negotiation.

Fed Wildcard to Watch

What’s in Today’s Report:

  • The FOMC Wildcard to Watch: Powell’s Presser
  • The Oil Rally (And How Long It Can Last)

Stock futures are slightly positive this morning ahead of the Fed today while global markets were largely flat after another quiet night of news.

There were no market moving economic reports overnight.

Oil prices are slightly lower this morning after the API reported a +2.9M bbl build in crude stocks vs. (E) -1.3M bbls draw ahead of this morning’s weekly EIA release.

Today, the main market focus will be the Fed Events: FOMC Announcement and Forecasts (2:00 p.m. ET), Fed Chair Press Conference (2:30 p.m. ET) although, there is also one economic report out in the U.S. this morning: New Home Sales (E: 630K).

Barring any bombshell headlines about trade or to a lesser degree, politics, it is likely to be a quiet session with price action being driven by positioning until the Fed starts up at 2:00 p.m. ET.

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