What’s in Today’s Report:
- Why Treasury Yields Surged Yesterday (Hint: inflation)
Futures are flat as markets digest Thursday’s rally and consider multiple reports that a debt ceiling deal is imminent.
Numerous media outlets have reported a two-year debt ceiling deal is imminent, and if that becomes official today we should expect a modest and temporary rally.
AI optimism/euphoria continued overnight with Marvell Technologies (MRVL) rising 18% on strong AI guidance.
Focus today will first be on the debt ceiling, and if a formal deal is announced with should expect a knee jerk rally, although by itself a debt ceiling compromise won’t be a sustainable bullish catalyst. Outside of the debt ceiling, the key reports today include the Core PCE Price Index (E: 0.3% m/m, 4.6% y/y) and Durable Goods Orders (E: -1.1%) and investors will want to see stability in both reports to hint at ongoing disinflation and a soft landing. We also get Consumer Sentiment (E: 58.0) and if inflation expectations rise further in that report, it could become a headwind on stocks.