The catalyst behind this week’s rally in natural gas has been a “late season blast of cold weather making its way across the country,” boosting demand for heating in many parts of the nation… said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly higher following a generally quiet weekend of news.
Geopolitically, there are calls for more sanctions on Russia as the international community is now accusing Russia of war crimes following the discovery of a mass grave outside of Kiev. Oil, which is the key proxy for additional sanctions, is only slightly higher, however, implying the market isn’t expecting significant additional sanctions in the near term.
Economic data was sparse as the only notable report was German exports which rose solidly (up 6.4%).
Today there are no notable economic reports and no Fed speakers, so the focus will be on geopolitics, and again any hints of progress towards a ceasefire will help extend the recent rally.
What’s in Today’s Report:
Futures are slightly higher as oil drops sharply on reports the U.S. is considering a massive oil release from the Strategic Petroleum Reserve.
Reports hit overnight that the U.S. is considering releasing 180 million barrels of oil from the SPR over the coming six months, and oil is down 6% as a result.
Economic data was slightly underwhelming as the March Chinese manufacturing PMI dropped below 50 to 49.5.
Today focus will be on inflation, as we get the Fed’s preferred measure of inflation via the Core PCE Price Index (E: 0.4%, 5.5%). If these numbers slightly underwhelm vs. expectations, that could lead to more hope inflation pressures are finally peaking, and we could see a rally as a result. Today we also get Jobless Claims (E: 195K) and have one Fed speaker, Williams at 9:00 a.m. ET.
What’s in Today’s Report:
Stock futures are lower with EU shares amid negative economic forecasts, a deteriorating state of Russia-Ukraine negotiations, and growing concerns about the yield curve.
Geopolitically, the Kremlin stated that the latest talks have not been “promising” and much work still needs to be done which is weighing on risk assets and bolstering oil prices this morning.
Economically, Germany cut its GDP growth forecast to just 1.8% in 2022 from 4.6% previously and an EU economic sentiment survey missed estimates.
Looking into today’s session, focus will be on jobs and growth data early with the ADP Employment Report (E: 438K) and Final Q4 GDP report (E: 7.1%) due out before the bell.
Additionally, there are two Fed speakers: Barkin (9:15 a.m. ET) and George (1:00 p.m. ET) but based on this morning’s price action, geopolitics remain the most notable influence on markets, and sentiment towards the war in Ukraine will likely be the biggest driver of markets again today.
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).
Upwards of 3 million barrels a day in Russian oil supply could be lost in the coming weeks, and “fading optimism” for a ceasefire deal between Russia and Ukraine drove gains for oil Thursday, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures are lower and oil is back above $100/barrel this morning amid negative comments from Russia about Ukraine negotiations while the yield curve continues to flatten post-Fed.
This morning, the Kremlin said that reports of progress in talks are “wrong” and Biden saying Putin is a “war criminal” is “unforgivable” which has sparked risk off money flows over the last hour.
Economically, Eurozone HICP rose 5.9% vs. (E) 5.8% Y/Y bolstering concerns about high inflation which has further flattened the yield curve in early trade.
Today, we will get several important economic reports including: Jobless Claims (E: 218K), Housing Starts (E: 1.70M), Philadelphia Fed Manufacturing Index (E: 15.0), and Industrial Production (E: 0.5%). There are no Fed speakers today.
Bottom line, the Fed is continuing to be digested today but focus has largely returned to Russia-Ukraine. And if the odds for a peace deal deteriorate meaningfully, expect at least a portion of yesterday’s big rally to be given back. Additionally, if economic data continues to indicate stagflationary trends emerging, risk assets could trade with a heavy tone.
U.S. benchmark oil remains overbought and could continue to pullback towards an initial support zone between $107 and $112…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Ongoing concerns about price pressures and Fed policy expectations being dialed back slightly due to geopolitics are both strong tailwinds behind gold here…analysts at Sevens Report Research wrote. Click here to read the full article.
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.