The 23 largest banks in the U.S. passed the Fed’s annual stress tests, and while none were expected to fail, the fact that there were no negative surprises is a general positive for the banking sector and financials, Tom Essaye, founder of research firm Sevens Reports, wrote Thursday. Click here to read the full article.
What’s in Today’s Report:
Futures are flat to start the second half of 2023 following a quiet weekend of news.
Economic data was mixed overnight as the EU Manufacturing PMI slightly missed estimates (43.4 vs. (E) 43.6) while the UK reading slightly beat expectations (46.5 vs. (E) 46.2), but neither number is moving markets.
Saudi Arabia and Russia made separate announcements about further reducing oil supply in the coming months, although they aren’t causing a material rally.
Today focus will be on the ISM Manufacturing PMI (E: 47.2) and at this point, and with yields this high, markets need to see solid data and that means the ISM Manufacturing PMI moving closer towards 50 and beating expectations.
As a reminder, the stock market will close at 1:00 p.m. today ahead of the July 4th holiday.
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What’s in Today’s Report:
Futures are moderately higher mostly on momentum and end of quarter/half positioning, as economic data overnight was mixed but not bad enough to interrupt the rally.
European inflation (HICP) fell to 5.5% vs. (E) 5.7% y/y, although the more important core reading rose to 5.4% y/y from 5.3%, as expected. So, there was some progress on headline inflation, but core inflation remains a problem.
In China, the June Manufacturing PMI rose to 49.0 vs. (E) 49.1, which is increasing expectations for more stimulus.
Today focus will be on inflation via the Core PCE Price Index (E: 0.4% m/m, 4.7% y/y). The idea of “No Landing” requires inflation to, at a minimum, stay flat, so any hotter than expected inflation metric will push yields higher and that likely would weigh on stocks today.
What’s in Today’s Report:
Futures are modestly higher after all 23 U.S. banks passed the Fed’s annual stress tests.
The 23 largest banks in the U.S. passed the Fed’s annual stress tests, and while none were expected to fail, the fact that there were no negative surprises is a general positive for the banking sector and financials.
Economically, Euro Zone Economic Sentiment, was basically in-line with expectations and isn’t moving markets.
Today focus will be on economic data, and the key reports today are: German CPI (E: 6.3% y/y), Jobless Claims (E: 270k) and Final Q1 GDP (E: 1.4%). Markets have priced in “Immaculate Disinflation” so inflation needs to continue to fall everywhere (including Germany), while markets also need to see jobless claims gradually rise (a big spike in claims would be a negative) to keep to bullish momentum going.
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Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil. Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil, said analysts at Sevens Report Research, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower on potentially negative U.S./China trade headlines and after more hawkish rhetoric from ECB members.
A WSJ article released late Tuesday stated the U.S. was considering more restrictions on chip exports to China, and that’s weighing on sentiment and the chip stocks.
Multiple ECB members made hawkish comments overnight, increasing the expectation for two more rate hikes.
Today there are no notable economic reports, but Fed Chair Powell does speak at 9:30 a.m. ET. However, if he just reiterates his previous message (progress has been made on inflation but the work isn’t done, meaning another rate hike) then his comments shouldn’t materially move markets.
Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote that the political strife in Russia is likely to have little market impact. Looking forward, obviously this injects more geopolitical uncertainty into the world, but as long as commodity prices don’t spike higher, the markets will largely ignore Russian political volatility, he wrote. Click here to read the full article.
If the data meaningfully disappoints, especially in the service sector, expect more risk off money flows amid growing recession worries today, wrote Tom Essaye, president of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Equity futures are modestly higher this morning as traders weigh renewed optimism about Chinese growth against more hawkish policy speak from multiple ECB officials, including President Lagarde, reiterating the need for a “higher for longer” policy rate path.
Premier Li of China confirmed the government is committed to achieving their 5% GDP target overnight which helped Asian markets outperform and fueled modest risk-on money flows around the globe.
Today’s list of economic data releases is a long one with Durable Goods Orders (E: -1.0%), Case-Shiller Home Price Index (E: 0.5%), FHFA House Price Index (E: 0.4%), Consumer Confidence (E: 103.7), and New Home Sales (E: 663K).
Beyond those economic reports, there are no Fed officials scheduled to speak today but there is a 5-Yr Treasury Note Auction at 1:00 p.m. ET that could move yields and influence equity market trading.
Bottom line, in order for markets to stabilize here and stocks to resume their 2023 rally, we will need to see signs of slowing, but not collapsing growth in today’s economic data and no surprises in the Treasury auction. Looking ahead, trading may slow down some today as investors position into tomorrow’s Central Bank Forum hosted by the ECB in which Fed Chair Powell will participate.
This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.
