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What Happens to Markets If the Bond Vigilantes Return?

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What Happens to Markets If the Bond Vigilantes Return?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Happens to Markets If the Bond Vigilantes Return?
  • What Happens to Markets If the Bond Vigilantes Don’t Return?

Futures are slightly lower mostly on digestion of the recent rally and following a mostly quiet night of news.

Economically, the only notable number was UK CBI Industrial Trends, which were slightly better than expected (-34% vs. (E) -40%).

Politically, President Trump conducted an interview with Sean Hannity overnight but nothing new was revealed.

Today we get our first notable economic report of the week via Jobless Claims (E: 218K) and the case remains that Goldilocks data (so in-line to slightly weak) is the best case scenario for stocks, as it implies solid growth but won’t further reduce rate cut expectations.

On earnings, the reporting season continues to gain steam and some reports we’re watching today include GE ($1.02), AAL ($0.64), FCX ($0.25), TXN ($1.19), ISRG( $1.77).

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Bond Vigilantes Are Back (Part 1)

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Bond Vigilantes Are Back (Part 1): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Bond Vigilantes Are Back (They’re Just Not Here Yet) – Part One

U.S. futures are higher with global markets this morning amid a continued relief rally after Trump focused on AI and energy initiatives instead of tariffs on his first day.

Economically, New Zealand CPI came in as expected at 0.5% in Q4 which helped ease global inflation worries.

Today there is just one, second-tiered economic report due to be released: Leading Indicators (E: -0.1%) which is unlikely to move markets.

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Year Bond auction at 1:00 p.m. ET. Investors will want to see more strong demand for both short duration and longer duration Treasuries to keep yields from rising again.

Finally, earnings season continues today with PG ($1.87), JNJ ($2.01), ABT ($1.34), KMI ($0.33), DFS ($3.15), and AA ($0.91) all releasing quarterly reports. Generally strong top and bottom line results would be an added tailwind to stocks.

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Some of the biggest gains in the bull market

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Some of the biggest gains in the bull market: Tyler Richey Quoted in Business Insider

Oracles of Wall Street: 11 pros who nailed 2024’s top trends

Building on Sevens Report founder Tom Essaye’s bullish fundamental outlook, Richey compiled the technical indicators he watches and concluded in February that the index could hit 6,000 by the end of 2024.

For example, the S&P 500’s relative strength index, which measures price momentum, had stayed in “overbought” territory for three weeks at the time. When that has happened in the past, it’s meant that the trend could continue for several months, Richey said. Investor sentiment was also bullish but not over-extended. And the yield curve was still inverted despite no sign of recession.

“Some of the biggest gains in the bull market — statistically, it’s measurable that they occur during yield curve inversions such as the late ’90s and 2006-2007,” he said.

Going into 2025, however, Richey sees signs that the rally could face hurdles if a negative catalyst comes along.

“Looking ahead, the collection of market indicators and cyclical signals we monitor suggest all the pieces are in place for this bull market to end in the weeks or months ahead and for a cyclical bear market to begin,” Richey said in an email. But he added that: “There is nothing in the current fundamental backdrop that suggests a bear market in stocks is a sure thing or even likely for that matter.”

Also, click here to view the full Business Insider article published on December 18th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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Four Key Areas of Policy and Politics That Matter Most

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Four Key Areas of Policy and Politics That Matter Most: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Four Key Areas of Policy and Politics That Matter Most to Markets
  • Weekly Economic Cheat Sheet: Composite PMIs and Jobless Claims in Focus

Futures are higher in volatile trade as investors weigh Trump’s fresh tariff threats against pro-growth policy plans.

Economically, the German ZEW Survey was mixed while the U.K. Unemployment Rate ticked up to 4.4% from 4.3%.

Looking into today’s session, there are no notable economic reports and no Fed officials are scheduled to speak, however, there are Treasury auctions for 3-Month and 6-Month Bills at 11:30 a.m. ET and 52-Week Bills at 1:00 p.m. ET. Rising yields in reaction to the auction results could lead to more market volatility and pressure stocks while strong demand (lower yields) would be welcomed by investors.

Additionally, earnings season continues today with quarterly reports from SCHW ($0.90), MMM ($1.66), DHI ($2.41), NFLX ($4.19), UAL ($3.01), and COF ($2.66), and investors will want to see evidence of continued earnings growth to support the case for a further stock market rally in 2025.

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Can Stocks Go Back-to-Back-to-Back?

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Can Stocks Go Back-to-Back-to-Back?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can Stocks Go Back-to-Back-to-Back?
  • Why CPI Was An Important Positive for Markets
  • EIA Analysis and Oil Market Update

Futures are modestly higher thanks mostly to solid earnings and guidance from Taiwan Semiconductor (TSM).

For AI related tech companies, guidance will be key this earnings season and TSM posted better than expected revenue guidance and the stock is up 5% pre-market.

Economic data overnight largely met expectations.

Today will be a busy day of notable economic data and earnings.  On the economy, we get several important reports today including, in order of importance, Retail Sales (E: 0.5%), Jobless Claims (E: 214K), Philly Fed (E: -8.0) and the Housing Market Index (E: 46).  As has been the case, data that meets or slightly misses expectations is the “best” case for markets (while very strong data will boost yields and pressure stocks).

On earnings, the Q4 reporting season is just starting to ramp up and some important results we’re watching today include BAC ($0.77), MS ($1.65), UNH ($6.71), JBHT ($1.63).

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Sevens Report Research founder Tom Essaye Interviewed on Yahoo Finance

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Tom Essaye Interviewed On Yahoo Finance

Trump’s economic policy impact, US dollar: Asking for a Trend

“Sevens Report Research founder Tom Essaye outlines what investors need to know to separate the headlines that matter to the market from the noise.

Also, click here to view the full interview with Yahoo Finance published on January 8th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Year-end positioning and lackluster trading volumes

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Year-end positioning and lackluster trading volumes: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Trump Is Already Rattling the Stock Market. Buckle Up.

Sevens Report President Tom Essaye believes year-end positioning and lackluster trading volumes—issues that will ease after New Year’s—are the real culprits behind the declines. 

“None of these events are big enough to derail this market, but they are a near-constant reminder of the drama Trump can manufacture (either directly or indirectly) on seemingly mundane functions of the government,” Essaye wrote.

“Altering or reducing the H-1B visa program reflects a further isolationism that investors fear would hurt the U.S. tech industry in the long run,” Essaye wrote. “And while that fear is a bit of a stretch, amidst large tech outperformance and thin volumes into year-end, it’s creating another reason to book profits.”

Also, click here to view the full Barron’s article published on December 31st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

 

Jobs Report Preview (Markets Closed Tomorrow)

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Jobs Report Preview (Markets Closed Tomorrow): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview
  • ISM Services PMI Takeaways – Strong Data Supports Hawkish Fed Stance
  • Chart – JOLTS Jump to Multi-Month High But Still Trending Lower

Futures were slightly higher earlier this morning as traders digested disappointing data out of Europe but volatility has picked up since CNN reported that Trump is weighing emergency measures to implement new tariffs programs.

Economically, German Manufacturing Orders plunged -5.4% vs. (E) 0.0% while EU Economic Sentiment fell 93.7 vs. (E) 95.7 and Eurozone PPI declined just -1.2% vs. (E) -2.5%.

Today, traders are likely to remain keenly focused on the early tariff headlines that have roiled futures in the pre-market. Any commentary from Trump that tamps down concerns about aggressive tariffs and the threat of global trade wars will help settle markets over the course of the day.

Additionally, there are two key labor market reports to watch today, the ADP Employment Report (E: 134K), and Jobless Claims (E: 216K). After yesterday’s “hot” ISM and JOLTS data, investors will want to see a return to “Goldilocks” data consistent with a cooling labor market to help temper the recent spike in yields and help stocks stabilize.

Finally, there is one Fed speaker early in the day: Waller (8:30 a.m. ET) and a 30-Yr Treasury Bond auction in the early afternoon (1:00 p.m. ET) that cold move yields, and in turn, impact equity markets (strong demand for the long bonds is the best outcome for stocks).

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Why Have Stocks Dropped?

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Why Have Stocks Dropped?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Have Stocks Dropped?
  • Weekly Market Preview:  Can Goldilocks Data Fuel A Rebound?
  • Weekly Economic Cheat Sheet:  Friday’s Jobs Report is the First Big Report of 2025.

Futures are extending Friday’s rally thanks to a rebound in political optimism and despite more mixed global economic data.

Mike Johnson was relatively easily re-elected Speaker of the House on Friday, providing a needed positive political event for markets and boosting pro-growth policy hopes.

Economically, global data remained lack luster as the UK Services PMI missed expectations (51.1 vs. (E) 51.4.).

Today focus will turn back to data with Factory Orders (E: -0.3%) and the December Services PMI (E: 58.5) and the more Goldilocks the readings, the more they’ll fuel this early bounce.  There is also one Fed speaker, Cook (9:15 a.m. ET), but she shouldn’t move markets.

Sevens Report Quarterly Letter

Our Q4 ’24 Quarterly Letter was delivered to subscribers last Thursday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

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Why Has the Trump Trade Stalled? (Part One)

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Why Has the Trump Trade Stalled? (Part One): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Has the Trump Trade Stalled? (Part One)
  • Economic Takeaways – November Retail Sales

Stock futures are recovering some of yesterday’s losses as cooler-than-feared inflation data in the EU is driving modestly dovish money flows ahead of the Fed decision.

Economically, inflation data out of Europe was “cooler” than feared with U.K. Core CPI rising to 3.5% vs. (E) 3.6% while Eurozone HICP rose to 2.2% vs. (E) 2.3%. The “cooler” data saw rates traders price in more policy rate cuts from the ECB in 2025.

Today, there is one economic report due to be released mid-morning: Housing Starts and Permits (1.340M & 1.430M) but the primary market focus will be the Fed decision at 2:00 p.m. ET and likely more importantly, Fed Chair Powell’s press conference at 2:30 p.m. ET.

While the Fed will almost certainly be the primary catalyst for markets today, there is some micro-news that could influence sectors and sub-sectors of the equity markets as we will get late season earnings from GIS ($1.22), JBL ($1.88), MU ($1.75), and LEN ($4.18).

Bottom line, investors are looking for the Fed to reiterate their view that the economy is tracking for a soft-landing and that the FOMC is not overly concerned with the latest uptick in inflation data that could signal a sustained “pause” in rate cuts. A hawkish tone in the announcement or Powell’s press conference would likely trigger renewed selling pressure in equity markets and higher bond yields.

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