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.
What’s in Today’s Report:
There is a tentative risk-on tone to trading this morning as U.S. equity futures track global shares higher thanks to new stimulus measures in China and easing natural gas prices in Europe.
The PBOC announced new measures to help stabilize the yuan and bolster the economy in the face of renewed Covid lockdowns and recent signs of slowing growth which was welcomed by markets overnight.
In Europe, German Manufacturers Orders fell -1.1% vs. (E) -0.4% but that is helping dial back some of the recently more hawkish policy expectations ahead of this week’s ECB meeting.
Looking into today’s session, there is one economic report to watch: ISM Services Index (E: 55.4), and no Fed officials are scheduled to speak.
That should leave the focus on currency and bond markets in the U.S. if both the dollar and short-duration yields can stabilize, and not move materially higher, then stocks should be able to make an attempt to stabilize after Friday’s late session reversal lower.
Additionally, if we see natural gas prices in Europe continue to pull back from Friday and yesterday’s rise, that should help the risk-on mood in markets persist as the Nord Stream 1 halt was the main catalyst for stocks rolling over on Friday.
What’s in Today’s Report:
Futures are slightly lower following a mostly quiet night as investors await today’s jobs report.
Economic data was disappointing as German exports unexpectedly declined (-2.1% vs. (E) 4.1%) while Euro Zone PPI was hotter than expected (37.9% y/y vs. (E) 36.4% y/y).
In China, authorities announced that companies in Chengdu could implement “closed loop” systems and stay in operation, which should reduce supply chain disruptions.
Today the key event is the August Employment Situation report and expectations are as follows: Job Adds: 293K, UE Rate: 3.5%, Wages: 0.4% m/m, 5.3% y/y. If markets can get a “Just Right” number (small job adds, a rise in the unemployment rate and a drop in wages) then stocks can extend yesterday’s rally as that will be the second straight “Goldilocks” report in two days (the other being yesterday’s ISM Manufacturing PMI) and it’ll increase hopes for an economic soft landing.
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.
Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to talk on the markets. Click here to watch the full interview.
If one million households in the U.K. didn’t pay their utility bills, I have to assume the respective utility companies would eventually cut power to those homes and that would actually ease some of the demand pressures on the grid which is expected to be strained this winter given the very low flows from Russia to Europe…Tyler Richey, co-editor at financial research firm, Sevens Report Research, told MarketWatch. Click here to read the full article.
If the dollar and Treasury yields continue to trend higher, it is only a matter of time before gold retests the 2022 lows…analysts at Sevens Report Research wrote in Monday’s newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are down close to 1% on follow through selling from Friday as hopes of a near term “Fed Pivot” continue to fade in reaction to Powell’s speech last week.
European shares are also sharply lower as tightening expectations for the ECB rose sharply on Friday. Markets are now pricing in a minimum 50 bps hike next week with a 75 bps hike a real possibility.
There were no notable economic reports overnight.
Markets dropped on Friday as Powell dismissed the idea of an imminent “Fed Pivot,” but the ECB also signaled more hawkish intentions on Friday, and it was the two events that combined to cause the ugly declines. Today there are no economic reports but there is an important Fed speaker, Brainard (2:15 p.m. ET) and if she echoes Powell’s comments from Friday, expect more losses in stocks.
What’s in Today’s Report:
Futures are modestly lower following a mostly quiet night ahead of Powell’s speech at 10:00 a.m. this morning.
Economic data was slightly underwhelmed as the German Gfk Consumer Climate declined to –36.5 vs. (E) -31.
The UK increased the electricity price cap for households by 80%, underscoring the impact of surging natural gas prices.
Today focus will be on the Powell speech at 10:00 a.m. and the market will be looking for Powell to tacitly endorse the “Fed Pivot” theory that’s helped stocks rally. Away from Powell, we also get two notable inflation readings via the Core PCE Price Index (E: 0.3% m/m, 4.7% y/y) and Consumer Sentiment (E: 55.1), but it will take a material surprise from either report to move markets today.