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Is the Baltimore Bridge Collapse a Risk to Inflation?

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What’s in Today’s Report:

  • Could the Baltimore Bridge Collapse Spark a Rebound in Inflation?
  • Durable Goods Orders Takeaways (More Weak Revisions)
  • Philly Fed Nonmanufacturing Survey (Another Whiff of Stagflation)
  • Consumer Confidence Shows Fading Household Financial Situations – Chart

Stock futures are rebounding from yesterday’s late session selloff as economic data overnight was mostly market-friendly while traders eye continued volatility in the yen.

Economically, Chinese Industrial Profits jumped by 10.2% y/y in the first two months of the year and the Eurozone Economic Sentiment headline rose to 96.3 vs. (E) 95.8. The overseas data helped ease global growth concerns.

The yen is attempting to stabilize this morning after falling to its lowest level against the dollar since 1990 overnight. A short-squeeze in the yen is a threat stocks and other risk assets as it would force traditional carry trades to unwind. The yen warrants close attention into the end of the week here.

There is no economic data today and just one Fed speaker after the close: Waller 6:00 p.m. ET.

There is a 7-Yr Treasury Note auction at 1:00 p.m. ET today. Yesterday’s 5-Yr auction was solid and investors will be looking for more strong demand for Treasuries in the belly of the duration curve today (a rise in yields would weigh on stocks).

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Another Hot Economic Report

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What’s in Today’s Report:

  • Another Hot Economic Report (Philly Fed)

Futures are modestly lower on negative global COVID headlines.

Austria because the first European country to reimpose a national lockdown due to rising COVID cases and markets fear more countries could follow (especially Germany).

Inflation and economic data again implied a “hot” recovery as German PPI rose 3.8% vs. (E) 1.6% while UK retail sales rose 0.8% vs. (E) 0.5%.

There are no economic reports today although there are two Fed speakers, Waller (10:45 a.m. ET) and Clarida (12:15 p.m. ET).  Clarida’s comments will we watched but he is likely to repeat Powell’s dovish mantra (gradual tapering and no rate hikes until late 2022).  Beyond the Fed, COVID headlines are again driving short term trading, so if we see more restrictions from Europe that will be an increased headwind for stocks.