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Stock Futures Are Bouncing

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Improvement in Chinese Economic Data: Sevens Report Analysts Quoted in Barron’s

Stock Futures Rebound After Selloff

“Stock futures are bouncing back modestly and bonds are stable this morning amid improvement in Chinese economic data,” said Tom Essaye, the founder of Sevens Report Research.

Also, click here to view the full Barron’s article on stock futures are bouncing published on September 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Stock Futures Are Bouncing

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Will the Restart of Student Loan Payments Hurt the Economy?

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What’s in Today’s Report:

  • Will the Restart of Student Loan Payments Hurt the Economy?

Stock futures are lower with European shares after some hawkish ECB chatter and more bad EU economic data overnight.

The ECB’s Klass Knot noted overnight that a September rate hike is being “underestimated” by markets. This is weighing on risk assets modestly this morning.

Economically, German Manufacturers’ Orders collapsed by -11.7% vs. (E) -4.0% in July while Eurozone Retail Sales in July met estimates with a monthly decline of -0.2%. The data offered fresh evidence that the European economy is threatening to fall into recession despite ongoing calls for a global soft landing.

Today’s focus will be on economic data this morning with International Trade in Goods and Services (E: -$68.0B) and the ISM Services Index (E: 52.4) due to be released. The market is looking for signs of slowing demand but not a sharp downturn in growth.

The ISM will be the more important report to watch.  If we get a number that is “too hot” or “too cold” will likely see yesterday’s stock market declines extended, while a Goldilocks print will help markets stabilize.

There is also one Fed speaker today: Collins (8:30 a.m. ET). If she pushes back on the peak rate narrative or rate cuts in 2024, that will add another headwind to stocks and other risk assets today.

Economy

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Is FAANGM Now GARP?

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What’s in Today’s Report:

  • Is FAANGM Now GARP?
  • Chart: The 10-Yr Note Yield Is Approaching Key Trend Support

U.S. stock futures are extending yesterday’s gains this morning as easing inflation concerns and more accommodative Fed chatter are fueling a rebound in tech shares.

The German Ifo Survey topped estimates overnight offering further evidence that the economic recovery is accelerating in the EU.

This morning, there are several housing market reports to watch: Case-Shiller Home Price Index (E: 1.3%), FHFA House Price Index (E: 0.9%), and New Home Sales (E: 957K), before May Consumer Confidence data (E: 119.0) is released shortly after the bell.

Additionally, there is a 2-Yr Treasury Note Auction at 1:00 p.m. ET that could impact Fed policy expectations (a weak auction could rekindle taper fears) and one Fed official is scheduled to speak: Quarles (10:00 a.m. ET).

Why We Are So Wary of an Economic Overheat

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What’s in Today’s Report:

  • Why We Are So Wary of an Economic Overheat

Stock futures are tracking global equities lower this morning with tech shares leading to the downside as inflation fears continue to grip markets ahead of the Fed minutes.

Economically, the U.K. PPI report for April notably showed input prices jumped a staggering 9.9% y/y vs. (E) 4.4% which further stoked inflation fears overnight.

There are no notable economic reports today leaving investors to focus on the release of the Minutes to the April FOMC Meeting at 2:00 p.m. ET.

Additionally, there are two Fed officials speaking mid-morning: Bullard (10:00 a.m. ET) and Quarles (10:00 a.m. ET) however it is rather unlikely that either will say anything market moving given the looming release of the Fed minutes this afternoon.

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Market Multiple Table: May Update

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What’s in Today’s Report:

  • Market Multiple Table: May Update
  • ISM Manufacturing PMI Takeaways
  • Is the Bank of England About to Become the Second Large Central Bank to Taper QE?

Stock futures are modestly lower this morning after a mostly quiet night of news as investors continue to digest the equity market’s latest run to record highs and technology shares lag.

Economically, the U.K.’s Manufacturing PMI was 60.9 vs. (E) 60.7 in April, helping the FTSE outperform this morning.

Today, there are a few economic reports to watch early in the day including: Motor Vehicle Sales (E: 17.5M), International Trade in Goods (E: -$74.0B), and Factory Orders (E: 1.3%) however none of them should materially move markets.

There are no Fed officials scheduled to speak today and no Treasury auctions.

Earnings season is still underway with a few notable companies reporting Q1 results today including: CVS ($1.72), PFE ($0.79), and LYFT (-$0.53).

Too Much Stimulus?

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What’s in Today’s Report:

  • Is There Such a Thing As Too Much Stimulus?
  • Is the Market Starting to Price in a Future Less-Dovish Fed?

Stock futures are flat and bond markets are trading in an orderly manner this morning as investors await details on President Biden’s infrastructure plan amid end of month and quarter positioning money flows.

Economic data was mostly positive overnight as China’s CFLP Manufacturing PMI came in at 51.9 vs. (E) 51.0 while German Unemployment met estimates at 6.0% and the Eurozone HICP Flash for March was 1.3% vs. (E) 1.3%.

Today, we will get our first look at March jobs data via the ADP Employment Report (E: 500K) and the market will be looking for a number that is not “too hot” to cause another leg higher in bond yields which would weigh on tech stocks but not too underwhelming to suggest the recovery in the labor market is beginning to lose momentum.

There is one other second tiered economic report: Pending Home Sales Index (E: -3.0%) and one Fed official scheduled to speak: Bostic (10:45 a.m. ET) but neither should move markets.

The main focus of the market today will be Biden’s two-part infrastructure plan which is expected to top $4T total and how the Administration and Congress plan to pay for it (higher taxes). If the plans push yields higher, expect some pressure on equities with tech underperforming however stocks are also susceptible to volatility linked to end of month/quarter positioning today.

Why Contracts for Difference Matter to You

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What’s in Today’s Report:

  • Why Contracts for Difference Matter to Your Clients

Stock futures are mixed as investors continue to digest the Archegos liquidation drama and look ahead to Biden’s infrastructure plans due tomorrow while yields rose overnight.

The 10 year Treasury yield rose by as much as 5 basis points overnight, reaching fresh 52-week highs which is weighing on Nasdaq futures this morning (down 0.40%).

Economic data was mostly positive overnight with Japanese Retail Sales and Eurozone Economic Sentiment both topping estimates which is supporting modest risk-on and reflationary money flows this morning.

Looking into today’s session, there are two reports on the housing market due out before the open: Case-Shiller Home Price Index (E: 1.2%) and FHFA House Price Index (E: 1.0%) and then Consumer Confidence (E: 96.4) after the bell, however none of the releases should materially move markets.

There are also a few Fed officials scheduled to speak: Quarles (9:00 a.m. ET), Bostic (12:00 p.m. ET) and Williams (2:00 p.m. ET) but they are largely expected to stick to the very dovish narrative of recent.

Today, market focus is likely to return to the bond markets given the sizeable move higher in yields overnight which is already pressuring Nasdaq futures. And if the rise in yields continues over the course of the day, expect renewed pressure on tech shares which will likely weigh on the broader stock market.

What the Fed Decision Means for Markets

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What’s in Today’s Report:

  • What the FOMC Decision Means for Markets
  • FOMC Takeaways
  • EIA Data Analysis and Oil Update

Stock futures are under pressure this morning (Nasdaq futures down over 1%) as the 10 year Treasury yield approached a new 52-week high of 1.75% overnight amid further digestion of yesterday’s Fed decision and lingering inflation concerns.

There were no notable economic reports or market moving headlines overnight.

Today, there are two important economic releases to watch ahead of the bell: Jobless Claims (E: 700K) and the Philadelphia Fed Manufacturing Index (E: 24.0) as investors will be looking for continued improvement in these two current month data points.

There are no Fed officials speaking today however the Treasury will hold a 10-Yr TIPS auction at 1:00 p.m. ET and if the outcome triggers a further spike in the 10 year yield, expect selling pressure on tech shares to weigh on the broader equity markets as the Fed decision continues to be digested.

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart
  • Was Yesterday the End of Tech Underperformance?

Stock futures are little changed after a mostly quiet night of news as investors look ahead to a key U.S. inflation report and another benchmark Treasury Note Auction.

Economically, Chinese inflation data came in slightly ahead of estimates overnight while French Industrial Production handily topped expectations (3.3% vs. E: 0.5%) however neither release is having a significant impact on markets.

Looking into today’s session market focus will be on inflation data early with the CPI report (E: 0.4%) due out ahead of the opening bell. A “hot” report could spark a move higher in yields which would likely weigh on tech shares and markets broadly. 1.60% is a key level to watch in the 10 year yield as selling pressure on equities has risen significantly in recent sessions when the benchmark yield approaches that mark.

From there, focus will turn to this afternoon’s 10-Yr Treasury Note Auction at (1:00 p.m. ET) as another poor auction for mid-duration Treasuries could also influence a sharp move higher in rates that again would weigh on equity markets, specifically tech.

Bottom line, where stocks go today will largely depend on the price action in the bond markets. If bonds remain orderly, the rebound in equities can continue, however if yields retest recent highs, expect another wave of volatility, especially in high-multiple sectors like tech.

The Global Response to Rising Yields

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What’s in Today’s Report:

  • Monitoring the Response to Rising Yields
  • ISM Manufacturing Index Takeaways

Stock futures are trading with mild losses this morning as yesterday’s gains are digested amid cautious comments out of China overnight and mixed economic data in the EU.

Guo Shuqing, a top Chinese banking regulator, said overnight that the divergence between asset rallies (he referred to them as bubbles) and economic growth in the U.S. and EU will result in corrections “sooner or later” which weighed on Asian stocks.

German Retail Sales missed expectations however a key European inflation gauge, the HICP, was in line with estimates, leaving dovish policy expectations for the ECB largely intact.

Looking into today’s session, there is just one economic data point: Motor Vehicle Sales (E: 16.4M) which should not move markets.

That will leave market focus on today’s two Fed speakers: Brainard (1:00 p.m. ET) and Daly (2:00 p.m. ET) as the market looks for further confirmation that the Fed remains unanimously committed to extremely accommodative policy for the foreseeable future.

Outside of economic data and Fed chatter, the bond market remains a major factor for equity market trading right now as if there is another disorderly spike in Treasury yields, it is safe to expect more volatility in the broader stock market, specifically big name tech companies.