“At this point, and with yields this high, markets need to see solid data and that means the ISM Manufacturing PMI moving closer towards 50 and beating expectations,” Sevens Report Research’s Tom Essaye writes. Click here to read the full article.
What’s in Today’s Report:
Futures are higher and global markets rallied overnight on rising hopes for a rapid decline in inflation.
Inflation metrics on Thursday hinted at accelerating disinflation (ISM Prices Paid and Unit Labor Costs were yesterday’s bullish catalysts) and that was reinforced this morning by a decline in Korean CPI.
Chinese stocks surged overnight thanks to a Bloomberg article that raised hopes for more government stimulus.
Today focus will be on the jobs report and estimates are as follows: 180K job adds, 3.5% Unemployment Rate and 0.3% m/m & 4.4% y/y wage gains. Given yesterday’s momentum, if the jobs report shows solid job gains and underwhelming wage growth, the rally should continue. However, if the jobs report comes in “Too Hot” on the headline or wages, don’t be surprised if markets give back part of yesterday’s rally.
What’s in Today’s Report:
Stock futures are tracking global equity markets lower while bonds rally thanks to disappointing bank earnings.
FRC, which has been in focus since the banking turmoil began in March, is trading lower by more than 20% in the premarket after reporting that deposits fell more than 40% in Q1 to just $104.5B vs. (E) $145B while the bank plans to cut as much as 25% of staff in Q2. The lower than expected deposit levels rekindled worries about the health of the banking system and financials are dragging the broader market lower this morning.
Today, there are a few economic releases to watch: Case-Shiller Home Price Index (E: -0.4%), Consumer Confidence (E: 104.2), and New Home Sales (E: 635K) but unless there are any material surprises, investors will remain focused on earnings as we will begin to get some of the big tech companies’ results after the close today.
On the earnings front we will hear from UPS ($2.19), VZ ($1.19), GM ($1.58), MCD ($2.30), GE ($0.13), PEP $1.37), and MMM ($1.60) before the open, and MSFT ($2.22), GOOGL ($1.07), V ($1.97), and TXN ($1.76) after the close. Investors will be looking for good top and bottom line results but potentially more importantly, solid guidance given the uncertain market backdrop right now.
What’s in Today’s Report:
Futures are extending Wednesday’s declines and are moderately lower as more global inflation data came in hotter than expected.
Euro Zone HICP rose 8.5% vs. (E) 8.2% y/y and joined French, Spanish and German CPIs as signaling a bounce back in inflation. That’s pushing global yields higher and weighing on futures (just like it weighed on stocks on Wednesday).
Today focus will remain on economic data and the key report is Unit Labor Costs (E: 1.4%). Wages are a major source of inflation the Fed is trying to bring down, so if Unit Labor Costs are lower than expected, that will likely cause a bounce in stocks and bonds. Other notable events today include Jobless Claims (E: 200K) and two Fed speakers, Waller (4:00 p.m. ET) and Kashkari (6:00 p.m. ET), although they shouldn’t move markets.
What’s in Today’s Report:
U.S. equity futures are little changed this morning following yesterday’s steep losses as Treasuries have stabilized ahead of today’s Fed meeting minutes release.
Economically, German CPI met estimates at 8.7% y/y but that remains a historically very high reading which continues to warrant aggressive policy from the ECB in the months ahead.
Looking into today’s session, there are no notable economic reports which will leave investors primarily focused on the FOMC meeting minutes release (2:00 p.m. ET). Before that release, the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET which could move bond markets, and if we see new highs in yields, expect additional pressure on stocks.
Finally, the Fed’s Williams speaks after the close at 5:30 p.m. ET and his comments could move markets in after-hours trading if he is materially hawkish.
“The spike in the 2-year yield tells us the market is now believing the Fed when it has been saying it’s going to raise rates close to or above 5%, notably, it wasn’t Powell’s commentary that got the market to believe that — it was the economic data from Friday, notably the jobs report and ISM Services PMI,” Essaye said, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
U.S. stock futures are lower this morning, led by mega-cap tech after MSFT earnings topped estimates but guidance disappointed which is weighing on sentiment broadly.
Economically, the Business Expectations component of the German Ifo Survey notably firmed to 86.4 vs. (E) 85.0 further supporting hopes that Europe will avoid a recession in 2023 but concerns about the global tech sector is offsetting the good economic data this morning.
There are no notable economic reports and no Fed officials are scheduled to speak today which will leave the focus on earnings.
Notable companies releasing quarterly results today include: BA ($0.30), T ($0.58), and FCX ($0.40) ahead of the bell, and TSLA ($1.15), IBM ($3.60), CSX ($0.47), and STX ($0.08) after the close.
Intraday, the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET, and as we saw with yesterday’s 2-Yr auction which sent stocks to new session highs, the outcome of the auction could move markets before focus returns to post-market earnings reports.
What’s in Today’s Report:
Stock futures are trading lower with global markets following negative Covid headlines out of China.
China reported a spike in Covid cases this weekend including the first Covid-related death in nearly six months which prompted new restrictions and lockdowns in cities that were previously in the process of reopening. That has triggered risk-off money flows this morning with equities declining globally and the dollar rising nearly 1% in early trade.
Economically, the German PPI for October was actually favorable as it fell a steep -4.2% vs. (E) +0.9%. However, in year-over-year terms, PPI remains up more than 30% which is a major headwind for the German economy.
Looking into today’s session, there are no economic reports and just one Fed speaker: Daly (1:00 p.m. ET) which will likely leave the focus on China and any new Covid-related headlines.
In the fixed income space, the Treasury will hold a 2-Yr Note auction at 11:30 a.m. ET and a 5-Yr Note auction at 1:00 p.m. ET. And if demand is soft and rates begin to move to meaningful new highs, expect selling pressure on the equity market to pick up moderately.
What’s in Today’s Report:
Futures are modestly lower as the Chinese yuan fell to a 14-year low overnight while traders look ahead to big tech earnings.
Economically, the German Ifo Survey was better than feared with Business Expectations up to 75.6 vs. (E) 74.8.
Looking into today’s session, there are several economic reports due to be released: Case-Shiller Home Price Index (E: -0.8%), FHFA House Price Index (E: -0.7%), and Consumer Confidence (E: 106.0). Since Friday’s renewed hopes for peak-hawkishness, the bad news is good news for markets so further softening in the data could keep downward pressure on yields and support a continued rebound in equities today.
There is also a 2-Yr Treasury Note auction at 1:00 p.m. ET that could shed some light on bond traders’ outlook for the terminal rate as a weak outcome could send yields higher and ultimately see the stock market give back some of the Friday/Monday gains.
Finally, earnings season is becoming the market’s primary focus and there are a lot of big names reporting today including: UPS ($2.84), KO ($0.64), GM ($1.89), MMM ($2.61), JBLU ($0.24), and SYF ($1.42) before the bell, while GOOGL ($1.25), MSFT ($2.30), and V ($1.86) are due to report after the close.
What’s in Today’s Report:
Futures are moderately lower mostly on momentum from last week’s declines and following a generally quiet weekend of news.
Geo-politically, Russian President Putin and Ukrainian President Zelensky gave interviews over the weekend and neither implied the war would end anytime soon, which is a mild disappointment for markets.
Chinese authorities ended the lockdowns in Chengdu, but gave no indication the “Zero COVID” policy will change.
Today the calendar is sparse given there’s only one economic report, Housing Market Index (E: 48), and the UK and Japanese markets are closed. So, positioning ahead of Wednesday’s FOMC decision should drive markets, and unless we get some positive corporate commentary to offset the FDX guidance, the path of least resistance into the Fed is lower.