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Are Rising Rates Really Bad For Stock Returns?

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What’s in Today’s Report:

  • Are Rising Rates Really Bad For Stock Returns?

Futures are higher as a sharp drop in oil prices and lower Treasury yields are supporting stocks ahead of today’s September jobs report.

Oil prices are falling as reports of potential strategic reserve releases in Europe ease supply concerns.

Economically, Eurozone HICP came in at 3.8% vs. (E) 3.7% y/y, while Core HICP met expectations at 2.5% y/y.

Today, focus will be on the September Employment Situation Report (E: 90K Job-Adds, 4.1% Unemployment Rate, 0.3% Wage Growth), with Factory Orders (E: 0.0%) and Motor Vehicle Sales (E: 16.6 million) also due. A Goldilocks jobs report should help support stocks.

Finally, Fed Governor Logan is scheduled to speak at 10:00 a.m. ET, although the jobs report will remain the primary focus for markets.

 

Equity Risk Premium Hits 2007 Levels

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What’s in Today’s Report:

  • Equity Risk Premium at 2007 Levels
  • February Composite PMI Flash Takeaways
  • Why Are Rising Rates Causing Stocks to Drop Now?
  • S&P 500 Chart: Trend Support From the October Lows In Focus

U.S. equity futures are little changed this morning following yesterday’s steep losses as Treasuries have stabilized ahead of today’s Fed meeting minutes release.

Economically, German CPI met estimates at 8.7% y/y but that remains a historically very high reading which continues to warrant aggressive policy from the ECB in the months ahead.

Looking into today’s session, there are no notable economic reports which will leave investors primarily focused on the FOMC meeting minutes release (2:00 p.m. ET). Before that release, the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET which could move bond markets, and if we see new highs in yields, expect additional pressure on stocks.

Finally, the Fed’s Williams speaks after the close at 5:30 p.m. ET and his comments could move markets in after-hours trading if he is materially hawkish.