“Economically, global service PMIs were mixed as the euro zone service PMI missed expectations, while the U.K. and Chinese service PMIs were in-line,” noted Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher following reports of progress on the debt ceiling negotiations over the weekend.
Another debt ceiling meeting is scheduled for Tuesday at the White House and major officials (including Biden and Yellen) stated progress was made in negotiations over the weekend, although a deal still isn’t likely this week.
Economically, Euro Zone IP slightly missed estimates.
Today there’s only one notable economic report, the May Empire Manufacturing Index (E: -3.70), and markets will want to see stability in the data to further hint towards a soft landing.
Looking at the Fed, there are numerous speakers today including Bostic (8:45 a.m. ET), Kashkari (9:15 a.m. ET), Barkin (12:30 p.m. ET) and Cook (5:00 p.m. ET) and while their comments may have a hawkish tone, the market firmly believes the Fed has paused on rate hikes and it’ll take Powell disavowing that notion for investors to reconsider.
Finally, debt ceiling headlines will likely continue, and don’t be shocked if there’s some pushback on the “progress” narrative from the weekend as the political gamesmanship kicks into high gear, with just over two weeks till the “X” date.
What’s in Today’s Report:
Futures are slightly higher despite more pain in regional bank shares in the pre-market and soft tech earnings from late yesterday as focus shifts to today’s Fed decision.
AMD is down 7%+ after a disappointing sales forecast late yesterday while shares of PACW and WAL (which fell sharply yesterday and weighed on the broader banking complex) are both down 7% to 12% in pre-market trade this morning.
Economically, Australian Retail Sales were better than expected while the Eurozone Unemployment Rate dipped which saw bond yields move off the overnight lows.
Looking into today’s session there are two important economic reports to watch as they could alter Fed policy expectations depending on how they come in. The ADP Employment Report (E: 143K) is due out before the bell while the ISM Services Index (E: 51.7) will be released at the top of the 10:00 a.m. hour ET.
From there focus will turn to the Fed with the FOMC Decision at 2:00 p.m. ET (E: +25 bp) and Fed Chair Powell’s press conference at 2:30 p.m. ET. How the Fed handles forward guidance in the statement and any insights Powell provides in the presser will be the key factors in determining whether stocks extend yesterday’s declines or stabilize and recover to test the YTD highs.
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What’s in Today’s 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%.
What’s in Today’s Report:
Stock futures are rising in sympathy with overseas markets on the back of dovish commentary by new BOJ Governor Kazuo Ueda and favorable economic data overnight that is easing “hard landing” worries.
Economically, Chinese CPI rose just 0.7% vs. (E) 1.1% and PPI dropped -2.5% vs. (E) -2.3% while Eurozone Retail Sales fell -3.0% vs. (E) -3.5%. In the U.S., the NFIB Small Business Optimism Index came in at 90.1 vs. (E) 89.0. The mostly better than expected data is helping rekindle hopes that a soft landing may be achieved.
There are no other notable economic reports today which will leave focus on a 10-Yr Treasury Note auction at 1:00 p.m. ET and the sole Fed speaker today: Goolsbee (1:30 p.m. ET) as traders are largely looking ahead to tomorrow’s CPI report.
The revisions fueled recession concerns that intensified this week, with “every major data point”—including jobless claims, manufacturing activity and construction spending—signaling the economy is slowing down and pushing some experts to worry it may be slowing down too quickly, says Sevens Report founder Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed following a mostly quiet night of news as markets digest this week’s underwhelming economic data ahead of the jobs report and long weekend.
Economic data overnight was better than expected as the Chinese Composite PMI beat estimates (57.8 vs. (E) 55.0) as did German Industrial Production (2.0% vs. (E) 0.0%).
Regional banks remained stable overnight following WAL’s update on deposit statistics yesterday.
Today focus will be on Jobless Claims (E: 201K) and a speech by Fed president Bullard (10:00 a.m. ET). Investors will want to see claims move higher, above 200k, to signal some moderation in the labor market, while we can expect Bullard to be hawkish, although keep in mind he does not represent the consensus at the FOMC (and as such his comments shouldn’t move markets, unless they’re a dovish surprise).
The surprise announcement also suggests OPEC+ may be getting more cautious about its outlook for global oil demand given the elevated threat of a potentially deep recession looming, says Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
“The UBS move is easing some of the angst surrounding the recent turmoil in the banking sector,” wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher following the successful merger of Silicon Valley Bank over the weekend.
First Citizens agreed to buy much of Silicon Valley Bank’s assets, and that resolution combined with larger deposit insurance chatter is helping stocks to rally this morning.
Economically, the only notable report overnight was the German Ifo Business Expectations and it was better than expected at 91.2 vs. (E) 88.0.
Today focus will remain on the banks and as has been the case, Frist Republic is the key – resolution for that bank remains the next step towards broader stability in the banking sector. Economically, today we get the Dallas Fed Manufacturing Index (E: -13.5) and have one Fed speaker, Jefferson at 5:00 p.m. ET, but neither should move markets.