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Market Multiple Table: April Update

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What’s in Today’s Report:

  • Market Multiple Table: April Update
  • S&P 500 Chart – Cautious Trade Ahead of Today’s CPI Report

Equity futures are slightly higher while the policy-sensitive 2-Yr Treasury yield is pushing further beyond 4% in pre-market trade as focus is exclusively on today’s CPI report.

Economically, Japanese PPI came in at 0.0% vs. (E) 0.1% which is adding a slight tailwind to risk assets this morning.

Looking into today’s session, all eyes will be on inflation data ahead of the open: CPI (E: 0.3% m/m, 5.2% y/y), Core CPI (E: 0.4% m/m, 5.6% y/y).

From there, focus will shift to the Fed as Barkin speaks ahead of the bell (9:10 a.m. ET) and Daly speaks mid-day (12:00 p.m. ET), before the latest FOMC meeting minutes will be released at 2:00 p.m. ET. Any hawkish commentary or verbiage within the minutes will likely weigh on stocks and push yields higher.

Bottom line, the CPI data will be the main catalyst today and to recap yesterday’s “CPI Preview” the “good scenario” is a headline below 5.2% with Core below 5.5%, the “bad scenario” is a headline between 5.2% and 6.0% with Core at 5.6%, and the “ugly scenario” is a headline above 6.0% with Core above 5.6%.

Tom Essaye Quoted in BNN Bloomberg on April 6th, 2023

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U.S. stocks rise amid hopes for ‘just right’ jobs print

As investors have aggressively priced in rate cuts this year, a “too hot” payrolls number would undermine those expectations, while a “too cold” report would add to concerns about a hard landing, according to Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.
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Fed Takeaways

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What’s in Today’s Report:

  • Is the More-Dovish-Than-Expected Fed Decision a Bullish Gamechanger? No. Here’s Why
  • Fed Decision Takeaways
  • EIA Data Takeaways and Oil Update

U.S. equity futures are rebounding modestly this morning but the price action is tentative as yesterday’s volatile reaction to the Fed decision and Yellen’s push back on “blanket” deposit guarantees are digested.

Looking overseas, the Swiss National Bank moved forward with a 50 bp rate hike overnight which showed policy makers’ increased confidence in the global banking system and continued commitment to reign in inflation pressures.

Looking into today’s session, there are a few economic reports to watch including: Jobless Claims (E: 195K) and New Home Sales (E: 645K).

There are no Fed officials scheduled to speak today but there is a 10-Yr TIPS auction at 1:00 p.m. ET which could offer some insight to the market’s view of long term inflation trends.

Bottom line, the late day selloff in equities yesterday was once again led by bank stocks after Treasury Secretary Yellen pushed back on the idea of expanded deposit insurance levels and today, that means bank stocks will again be in focus. If banks are able to stabilize, stocks broadly should be able to as well, but if we see more selling pressure, expect more volatility over the course of the day.