Oil futures ended higher on Thursday, with prices near-term oversold, following Wednesday’s multi percentage-point drop to multi-month lows…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
If the recent dynamic of rising rates, a firming dollar, and fading inflation expectations continues, it is only a matter of time until gold breaks down through the bulls’ ‘line in the sand’ at $1,680 and hits new lows for the year…analysts at Sevens Report Research wrote in Wednesday’s newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are moderately higher as the U.S. Dollar extended Friday’s declines thanks to a hawkish ECB article.
The euro is surging another 1% and pushing the Dollar Index lower following a hawkish ECB Reuters article that stated the ECB may have to raise rates to 2% to curb inflation, which is higher than current expectations.
Economic data was slightly underwhelming as UK Industrial Production (0.1% vs. (E) 0.3%) and UK Monthly GDP (0.2% vs. (E) 0.4%) both missed estimates.
Today there are no notable economic reports nor any major Fed speakers, so we’d expect stocks to continue to follow the dollar ahead of tomorrow’s CPI report. If the dollar extends this morning’s declines, stocks should be able to hold this early rally.
What’s in Today’s Report:
Futures are little changed following a mostly quiet night and ahead of the ECB decision and Powell Q&A session.
The Reserve Bank of Australia signaled it will slow the pace of rate hikes going forward but gave no insight into its “Terminal Rate.”
Economically, Japanese GDP slightly beat estimates (3.5% vs. (E) 3.0%) but that’s not moving markets.
Today’s focus will be on Powell (9:10 a.m. ET) and the ECB (75 bps hike), and any hint of “peak hawkishness” from Powell or the ECB will be a positive catalyst for markets (and no hints of it will likely be a headwind on stocks). Outside of Powell and the ECB, we also get Jobless Claims (E: 240K) and there’s one Fed speaker, Evans (12:00 p.m. ET), but neither of those should move markets.
The jobs report once again carries risks for stocks because if it runs ‘too hot,’ that will increase the prospects of more hikes and, more importantly, delay when markets expect rates will be cut, Sevens Report said. Click here to read the full article.
The question for markets here is, at what point do investors begin to cheer the resilience of economic growth this year in the face of historically aggressive Fed policy tightening that is now beginning to show signs of being effective in capping and likely reducing inflation pressures? Tom Essaye, founder of Sevens Report Research, wrote in a note Friday. Click here to read the full article.
The labor market needs to show signs that it’s on the path to returning to a state of relative balance, where job openings are roughly the same as the number of people looking for jobs — and if it does not show that, then concerns about a more hawkish-for-longer Fed will rise, and that’s not good for stocks, wrote Tom Essaye, a former Merrill Lynch trader and the founder of the Sevens Report newsletter. Click here to read the full article.
All of yesterday’s news flow was digested as bearish for oil as the threat of OPEC+ cuts were reduced, demand estimates in Europe were adjusted lower on poor data while ‘hot’ data in the U.S. added to already hawkish money flows that bolstered the dollar and further pressured oil, wrote analysts at Sevens Report Research, in a note. Click here to read the full article.
There are multimillion more job openings than there are people who are actually looking for a job…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures pulled back from overnight gains and are now trading flat as most international markets are lower following mixed economic data.
Japanese Retail Sales and Industrial Production figures both handily topped estimates but the August HICP Flash in Europe (their CPI equivalent) showed core inflation jumped 4.3% vs. (E) 4.0%, reiterating inflation risks.
Today, the early focus will be on the ADP Employment Report (E: 200K) which will be the first one since they updated the methodology of the report so be prepared for a potentially surprising print.
From a market standpoint, traders will want to see a moderation in the labor market (especially after yesterday’s JOLTS report) to show the Fed’s tightening actions are beginning to cool the labor market which is one of the key steps towards reaching “peak hawkishness.”
There are also a few Fed speakers to watch today: Mester (8:00 a.m. ET), Logan (6:00 p.m. ET), and Bostic (6:30 p.m. ET) and the market would welcome any degree of less hawkish commentary as the more hawkish tone of the last week has been largely responsible for the equity market losses into the end of the month.