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Why the Negative U.S.-Iran Headlines Didn’t Hit Markets More on Monday

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What’s in Today’s Report:

  • Why the Negative U.S.-Iran Headlines Didn’t Hit Markets More on Monday
  • How Is the Consumer So Resilient (Low Unemployment)

Futures are solidly higher this morning and oil prices are down 2%+ as there were no further geopolitical escalations following Iran’s missile strikes on the UAE yesterday.

The Reserve Bank of Australia raised rates 25 bp to 4.35% but signaled policy rates are likely to remain “on hold” at current levels, limiting the hawkish impact on global bond markets.

Today, there are several noteworthy economic reports to watch including International Trade in Goods (E: $-60.4B), New Home Sales (E: 668K), ISM Services Index (E: 53.9), JOLTS (E: 6.8 million). Investors will want to see more signs of solid growth/employment and limited inflation pressures (specifically in the ISM release).

Additionally, there are two Fed officials speaking: Bowman (10:00 a.m. ET) and Barr (12:30 p.m. ET) and a handful of noteworthy earnings releases with investors still primarily focused on the tech names. Earnings today include: SHOP ($0.22), PYPL ($1.27), ET ($0.38), AMD ($1.06), SMCI ($0.55), and AMC ($-0.32).

 

Fed Day

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What’s in Today’s Report:

  • FOMC Preview (Abbreviated Version)
  • Reserve Bank of Australia Decision
  • CME FedWatch Tool – Chart

Stock futures are little changed near record highs as a sense of Fed paralysis grips the markets ahead of the FOMC announcement today.

Economic data overnight was slightly better than expected (both the Chinese PMI Composite and Eurozone Unemployment rate beat) but the market reaction was limited with the Fed in focus.

This morning, there are several fairly important economic reports to watch as the ADP Employment Report (E: 400K) kicks off jobs week before the bell, and then we get both Factory Orders (E: 0.1%) and the ISM Services Index (E: 61.9) shortly after the open. Unless there are major surprises in any of the reports, however, the market impact should be limited with the Fed looming.

After the data is released, markets are likely to quiet down ahead of the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) which will be the session’s main events.

Finally, earnings will continue to roll out with CVS ($1.79), MAR ($0.97), and HUM ($4.61) releasing results before the open, and ROKU ($0.06), QCOM ($2.26), and MGM (-$0.04) reporting after the close.