“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.
What’s in Today’s Report:
S&P 500 futures are little changed, notably hovering within a few points of their pre-CPI levels from yesterday as traders await the December Fed decision.
Economically, U.K. CPI favorably dropped sharply from 2.0% in October to 0.4% in November, below estimates of 0.6% in the latest sign of easing global inflation pressures.
China is moving forward with economic/Covid policy meetings this week after previously saying they would be postponed pointing to a potential reopening occurring sooner than later.
Today, there is just one economic report due early in the day: Import & Export Prices (E: -0.5%, -0.6%) but unless there is a huge surprise the numbers are not likely to have an impact on equities with the Fed looming.
Turning to the Fed, the FOMC Announcement will hit the wires at 2:00 p.m. ET with markets pricing in a high likelihood of a 50 bp hike while the market will be focused on the “dot plot.” A terminal rate of 5% or above will be viewed as hawkish and likely weigh on stocks.
Finally, Fed Chair Powell’s Press Conference is at 2:30 p.m. ET and his tone could very well decide the final direction of stocks into the close today (a stubbornly hawkish stance remains a threat to equities and other risk assets right now).
What’s in Today’s Report:
Futures are slightly higher as China continues to remove COVID restrictions. The rest of the weekend was quiet from a macroeconomic perspective.
China announced it will deactivate its COVID tracking app in the latest signal that it is gradually abandoning the “Zero COVID” policy.
Economically, reports were sparse but UK Industrial Production (0.7% vs. (E) 0.0%) and Monthly GDP (0.5% vs. (E) 0.4%) both beat expectations.
Today the economic calendar is quiet and trading should be also, as markets look ahead to the week’s key events tomorrow (CPI) and Wednesday (FOMC Decision).
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What’s in Today’s Report:
Futures are modestly lower as persistent concerns about hawkish Fed policy and fading global growth overshadow positive Covid policy news out of China and encouraging EU economic data.
Economically, German Industrial Production was better than feared at -0.1% vs. (E) -0.6% while Q3 Eurozone GDP topped estimates at 2.3% vs. (E) 2.1% Y/Y suggesting the EU economy may be stabilizing.
China’s NHC issued new guidelines on Covid restrictions overnight that eased certain testing and quarantine requirements and will hold a press conference tomorrow which points to the potential for more progress in moving away from Covid-Zero.
Looking into today session, there is one economic report before the bell: Productivity & Costs (E: 0.4%, 3.3%) and then Consumer Credit (E: 27.3B) will be released in the afternoon. The latter report is not one we typically follow closely but there has been increasing concern about the health of household balance sheets, so a sharp move higher in outstanding credit could raise concerns about defaults in the coming quarters.
Finally, there are no Fed speakers today but stocks have been taking queues from rate markets and the dollar so if either meaningfully move higher, that will add pressure to the broader equity market today.
What’s in Today’s Report:
Futures are moderately lower despite in-line economic data and more re-opening optimism from China, as markets further digest Friday’s jobs report.
Reuters reported that COVID may be downgraded to “Category B” in China which may result in new, less restrictive guidance from the government as early as this week.
Economic data largely met expectations as the Euro Zone Composite PMI, UK Composite PMI, and Euro Zone Retail Sales reports were all basically in line.
Today the calendar is mostly quiet but the focus will be on the ISM Services PMI (E: 53.5) and if the headline can remain firm (above 50) and prices can drop further, that’ll help support stocks.
What’s in Today’s Report:
Stock futures are slightly higher and Treasury yields are largely steady ahead of today’s midterm elections.
Economically, the U.S. NFIB Small Business Optimism Index came in at 91.3 vs. (E) 91.8 while Eurozone Retail Sales met estimates at 0.4% but neither release is materially impacting markets this morning.
There are no additional economic reports today and no Fed officials are scheduled to speak.
In Monday’s Sevens Report we incorrectly said CPI was to be released on Wednesday but the report is due out on Thursday. We apologize for any confusion this may have caused.
Bottom line, focus will be on the midterms today which will likely result in a mostly quiet session, however, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET that could cause a move in yields and ultimately impact trading in equities.
What’s in Today’s Report:
U.S. futures and global stocks are rallying today amid reports that China is forming a “reopening committee” as part of a new push to ease Covid restrictions (however China’s foreign ministry has denied the rumors).
The RBA raised rates by 25 bp overnight, meeting estimates while the U.K.’s Manufacturing PMI was slightly better than feared at 46.2 vs. (E) 45.8.
Today, the focus will be on economic data early with the ISM Manufacturing Index (E: 50.0) and JOLTS (E: 9.875M) both due out shortly after the opening bell. But market reactions to the data are likely to be limited as the November FOMC meeting gets underway.
Earnings will remain in focus today with UBER (-$0.17), PFE ($1.47), BP ($1.94), and SYY ($0.99) reporting ahead of the bell, while AMD ($0.55) and ABNB ($1.46) will release results after the bell.
Bottom line, the combination of mostly favorable market news flow this morning, the calendar, and trader positioning into the Fed are all contributing to this morning’s pre-market gains, however, “Fed paralysis” is likely to set in today and into tomorrow’s morning session as investors await the latest Fed decision.
What’s in Today’s Report:
Futures are slightly higher ahead of this morning’s CPI as reports suggest UK PM Truss will have to abandon more of her fiscal spending and tax cut plan.
Positively, conservative members of Parliament continued to push back against PM Truss’s fiscal plan and that’s helping the Pound rally and GILT yields to decline.
Negatively, Chinese authorities are reimposing some restrictions in Shanghai as COVID cases rise and as Chinese officials hold on to the “Zero COVID” policy.
Focus today will be on CPI and estimates are as follows: Headline: 0.2% m/m and 8.1% y/y. Core: 0.4% m/m and 6.5% y/y. For CPI to spark a material rally, markets will want to see outright declines in CPI (so less than 8.1% and 6.3% respectively). Conversely, year over year CPI coming in higher than September readings will reinforce the idea that inflation is not declining, and the market is a long, long way from a Fed pivot. The other notable report today is Jobless Claims (E: 225K) but that shouldn’t move markets.
What’s in Today’s Report:
Futures are higher on potential improvement in the UK fiscal drama and on better than feared economic data.
UK PM Truss will meet with the UK Office for Budget Responsibility today and the hope is something comes from the meeting to further stabilize markets.
Economically, the September Chinese manufacturing PMI beat estimates and rose back above 50 (50.1 vs. (E) 49.4).
The key event today will be the result of the meeting between UK PM Truss and the Office for Budget Responsibility, as that whole situation needs to stabilize if stocks are going to hold up. Beyond the UK fiscal drama, today there is an important inflation report, the Core PCE Price Index (E: 0.5% m/m, 4.8% y/y) but unless it surprisingly drops, it shouldn’t move markets.
Finally, there are several Fed speakers today but the most important one is Brainard (9:00 a.m. ET) and if she’s slightly dovish, that could help stocks further rally. Other speakers include Barkin (8:30 a.m., 12:30 p.m. ET), Bowman (11:00 a.m. ET) and Williams (4:15 p.m. ET).
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.