Posts

Jobs Day

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What’s in Today’s Report:

  • Jobs Day
  • Can a Run Hot Economy Turn into Stagflation?

Futures are modestly higher as President Trump downplayed the latest strikes on Iran.

President Trump called Thursday’s strikes on Iran a “love tap” and reiterated the ceasefire was still in place, easing markets concerns.

German Industrial Production slightly missed estimates (-3.0% vs. (E) -2.5% y/y) but that’s not moving markets.

Focus today will be on the April jobs report and expectations are as follows:  63K Job-Adds, 4.3% UE Rate, 3.8% Y/Y Wage Growth.  The best case for markets remains a Goldilocks number that combines a solid jobs number modestly above estimates and stable wage growth at or below estimates.

Geopolitically, the market continues to ignore headlines about limited U.S./Iran strikes and likely will continue to do so as long as the administration says the ceasefire is still in place.

Finally, there are several Fed speakers this evening including Bowman, Daly, Goolsbee & Waller (7:30 p.m. ET) but they shouldn’t move markets.

 

What Is a “Run-Hot” Economy (And What Does It Mean for Markets?)

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What’s in Today’s Report:

  • What Is a “Run-Hot” Economy and What Does It Mean for Markets?
  • ISM Services PMI Takeaways

Futures are sharply higher amid positive geopolitical news and more strong mega-cap tech earnings overnight with AMD reporting blowout Q1 results (shares up ~25%).

Oil futures are down 10%+ and bond yields are off 8+ bp after Axios reported a U.S.-Iran peace deal that would result in the immediate reopening of the Strait of Hormuz is imminent.

Looking ahead to today’s session, focus will primarily be on the positive geopolitical developments but “jobs week” kicks off this morning with the release of the ADP Employment Report (E: 85K) pre-market.

Additionally, there are two Fed officials scheduled to speak today: Musalem (9:30 a.m. ET) and Goolsbee (1:00 p.m. ET) as well as a 4-Month Treasury Bill auction at 1:00 p.m. ET.

Finally, earnings season continues with DIS ($1.49), NVO ($0.87), UBER ($0.71), IONQ ($-0.55) and APP ($3.40) all scheduled to release quarterly results today.

 

Why “JGBs” and a “Run-Hot” Economy Matter to Your Clients

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What’s in Today’s Report:

  • Why a Spike in Japanese Bond Yields Hit Stocks
  • Implications of the Administration’s Policies: A Run-Hot Economy (and What Might Come Next)

Stock futures bounced overnight amid stabilizing global bond yields as traders digested Tuesday’s volatile start to the short trading week before Trump’s speech in Davos.

Economically, the U.K.’s December CPI report was “warm” with the headline rising +0.2% to 3.4% vs. (E) 3.3% which saw yields come off their overnight lows in pre-market trading.

There are no economic reports due to be released today and no Fed officials are scheduled to speak. However, President Trump is scheduled to deliver an address at the World Economic Forum in Davos at 8:30 a.m. ET, and any commentary on Greenland could roil markets in what has already been a volatile week.

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET. Yesterday’s Treasury auctions saw weak demand across durations which added upside pressure to bond yields, and if we see more of the same in today’s auctions, rising yields could reignite volatility.

Finally, earnings season remains in full swing with a handful of noteworthy companies reporting today including: JNJ ($2.49), SCHW ($1.37), and KMI ($0.36).

 

The Sector Winner from a “Run-Hot” Economy

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What’s in Today’s Report:

  • The Sector Winner From a “Run-Hot” Economy
  • Pending Home Sales Takeaways

Futures are lower and bonds are rallying modestly amid the growing threat of a government shutdown this week.

Economically, China’s official Manufacturing PMI edged up 0.4 points to 49.8 vs. (E) 49.6 in September.

Today kicks off jobs week with the August JOLTS report (E: 7.100 million) due out shortly after the bell. The closer the headline is to estimates, the better as a too-hot or too-cold print could weigh on already shaky markets amid the government shutdown worries.

Additionally, Consumer Confidence (E: 96.0), the Case-Shiller Home Price Index (E: -0.2%), the FHFA House Price Index (E: 6.7%), and Chicago PMI (E: 43.5) will all be released today.

There are a handful of Fed speakers today: Collins (9:00 a.m. ET), Goolsbee (1:30 p.m. ET), and Logan (7:10 p.m. ET), and the more dovish their tone, the better for markets as two more rate cuts in 2025 are still largely priced in.

Finally, there are a few late-season earnings releases to watch: PAYX ($1.21), UNFI ($-0.22), NKE ($0.28).