Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil. Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil, said analysts at Sevens Report Research, in a note. Click here to read the full article.
This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.
WTI futures have dropped below $70/bbl four times this year with increasing frequency, but each time technical support has held at $67-$69, Sevens Report Research said, also noting each subsequent price bounce has run out of steam at a lower price point. Click here to read the full article.
This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest the political volatility in Russia and underwhelming economic data.
A short-lived rebellion by the Wagner private army against the Russian government dominated headlines this weekend, but from a market standpoint this only matters via its impact on oil prices, and they are little changed.
Economically, German IFO Business Expectations fell to 83.6 vs. (E) 88.0, which is the second weak German economic number in the past two trading days.
Today focus will remain on the Russian political situation, so watch oil to cut through the headline noise. If oil rises sharply, the situation is deteriorating and that would weigh on markets.
What’s in Today’s Report:
Stock futures are falling with global markets and yields are rising this morning after more hawkish central bank decisions overnight as focus turns to the BOE.
In Europe, monetary policy decisions were net hawkish as Norway’s central bank raised rates 50 bp vs. (E) 25 bp to 3.75% while the Swiss National Bank met estimates with a 25 bp hike to 1.75%. The rate hikes are pressuring global bond markets (yields higher) and weighing on sentiment, dragging equity markets lower.
Looking into today’s session, early focus will be on the Bank of England as a 25 bp hike to 4.75% in the benchmark policy rate is expected but there is risk of a 50 bp hike to 5.00% which would be another hawkish surprise for markets and likely result in rising yields and more pressure on overbought equity markets.
In the U.S. there are two economic reports to watch: Jobless Claims (E: 261K) and Existing Home Sales (E: 4.250M). A further rise in claims could bring into question whether or not the labor market is suddenly beginning to deteriorate meaningfully while strong housing data would warrant a hawkish reaction after the much better than expected Housing Starts print earlier this week.
From there, focus will turn to the Fed as Chair Powell continues his semi-annual Congressional testimony at 10:00 a.m. ET while Mester will speak around the same time (10:00 a.m. ET).
Finally, there is a 5-Yr TIPS auction at 1:00 p.m. ET that could offer insight to inflation expectations and move yields, but most of the market-moving news will likely hit before the lunch hour today.
What’s in Today’s Report:
Futures are flat as investors digest a disappointing earnings forecast by FDX (down 3% premarket) and a hotter than expected inflation print overseas as focus turns to Powell’s testimony on Capitol Hill today.
U.K. CPI held steady at 8.7% vs. (E) 8.4% y/y in May which saw the odds of a 50 bp BOE hike tomorrow jump to 50% which is weighing modestly on bonds this morning.
There are no notable economic reports in the U.S. today which will leave investors focused on Powell’s semiannual testimony before Congress which begins at 10:00 a.m. ET. Investors will be looking for any clarity on the Fed’s future policy plans as the markets currently do not believe the FOMC’s dot plot showing two more rate hikes before year end.
Outside of the D.C., there are several other Fed speakers to watch including: Cook (10:00 a.m. ET), Jefferson (10:00 a.m. ET), Goolsbee (12:25 p.m. ET), and Mester (E: 4:00 p.m. ET). Again markets will be looking for any clarity on rate hiking plans following the June “skip.”
Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could impact yields and if we see yields move meaningfully higher, that will weigh on the high valuation sectors that have led the market higher this year.
What’s in Today’s Report:
Futures are lower to start the holiday-shortened trading week today with Asian markets underperforming as the latest Chinese stimulus efforts were seen as underwhelming while inflation trends in Europe remain favorable.
The PBOC lowered both the 1-Yr and 5-Yr prime loan rates by 10 bp overnight to 3.55% and 4.2%, respectively, but the cuts disappointed versus hopeful investor expectations given weak economic data lately, and markets traded with a risk-off tone in the wake of the announcements.
In Europe, German PPI fell to 1.0% vs. (E) 1.8% in May offering the latest evidence that the global disinflation trends remain intact.
Looking into today’s session, there is just one economic report to watch: Housing Starts (E: 1.40M) which shouldn’t move markets, and only one Fed speaker: Williams (11:45 a.m. ET).
With stocks overextended by multiple measures right now, there will likely be some degree of digestion of the latest leg higher in equity markets now that the June Fed decision and Friday’s massive options expiration are behind us. With that in mind, focus will begin to shift to Powell’s semi-annual Monetary Policy Report to Congress which begins tomorrow as investors look for further insight to the Fed’s future policy plans.
Tyler Richey, co-editor at Sevens Report Research, pointed out that the EIA showed that the four-week moving average of gasoline supplied, a proxy for consumer fuel demand, rose to a new 18-month high of 9.24 million barrels a day. That suggests that the trend in gasoline demand is “one that is increasing, and that is a good thing for the time being,” he said. Click here to read the full article.
What’s in Today’s Report:
Stock futures are flat as yesterday’s rally is digested while global markets were mostly higher overnight thanks to continued optimism about AI focused investments and in-line inflation data in Europe.
ADBE shares were up as much as 4% in pre-market trading after strong earnings and AI-related guidance yesterday which is supporting mega-cap tech ahead of the open this morning.
The Narrow Core inflation reading within the Eurozone HICP (their CPI equivalent) fell from 5.6% to 5.3% y/y in May, meeting estimates and offering further confirmation that the global disinflation trend has resumed.
Today, there are no Fed officials scheduled to speak and just one economic report to watch: Consumer Sentiment (E: 60.5), but the consumer inflation expectations components within the release could move markets if they are meaningfully different from the previous release.
Finally, on a derivatives market note, today is a Quadruple Witching options expiration which means volumes will be elevated and volatility could potentially spike due to trader repositioning.