What’s in Today’s Report:
- How to Explain the Current Pullback to Clients & Prospects
- Weekly Market Preview: Will Treasury Yields Stabilize? (That’s the Key to Ending This Pullback)
- Weekly Economic Cheat Sheet: Important Growth Updates and Powell Speech on Friday
Futures are modestly higher thanks to more evidence of global disinflation and despite another round of underwhelming Chinese stimulus.
German PPI declined -6.0% y/y vs. (E) -5.1% y/y and that’s serving as a reminder that inflation is still falling globally.
In China, officials cut the Loan Prime Rate less than expected (-10 bps vs. (E) -15 bps) and while that will provide stimulus, it’s not alleviating concerns that the Chinese economy will be a headwind on global growth.
Today there are no economic reports and no Fed speakers (the Jackson Hole Fed conference is this week, so speakers will increase throughout the week culminating with Powell on Friday). As such, Treasury yields will remain a short-term influence on stocks. Yields and futures are higher this morning but if yields extend the rally throughout the day, don’t be surprised if stocks give back these early gains.