Oil stabilized at support near the 2023 lows following Wednesday’s weekly Energy Information Administration report, which showed a “massive draw” in commercial crude-oil stockpiles, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
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, said Tom Essaye, founder at Sevens Report Research. Click here to read the full article.
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.
Sevens Report Quarterly Letter Delivered Today
Our Q2 ’23 Quarterly Letter will be released today.
We use our strength (writing about the markets) to help you:
You can view our Q1 ’23 Quarterly Letter here
To learn more about the product (including price) please click this link.
If you’re interested in subscribing, please email info@sevensreport.com.
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.
Sevens Report Q2 ’23 Quarterly Letter Coming Monday, July 3rd.
The Q2 2023 Quarterly Letter will be delivered to subscribers on Monday, July 3rd.
Stocks were surprisingly strong in the first half of 2023, but with investor sentiment now very bullish and the financial media proclaiming a new “Bull Market” has started, it’s important for advisors to keep client expectations grounded. A well-written quarterly letter that details the opportunities and risks facing investors can keep investor expectations grounded.
We will deliver the Q2 ‘23 Quarterly Letter on the first business day of the new quarter because we want you to be able to send your quarterly letter before your competition (and with little-to-no work from you).
You can view our Q1 ’23 Quarterly Letter here.
To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.
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.
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.
What’s in Today’s Report:
Stock futures are falling with global markets and yields are rising this morning after more hawkish central bank decisions overnight as focus turns to the BOE.
In Europe, monetary policy decisions were net hawkish as Norway’s central bank raised rates 50 bp vs. (E) 25 bp to 3.75% while the Swiss National Bank met estimates with a 25 bp hike to 1.75%. The rate hikes are pressuring global bond markets (yields higher) and weighing on sentiment, dragging equity markets lower.
Looking into today’s session, early focus will be on the Bank of England as a 25 bp hike to 4.75% in the benchmark policy rate is expected but there is risk of a 50 bp hike to 5.00% which would be another hawkish surprise for markets and likely result in rising yields and more pressure on overbought equity markets.
In the U.S. there are two economic reports to watch: Jobless Claims (E: 261K) and Existing Home Sales (E: 4.250M). A further rise in claims could bring into question whether or not the labor market is suddenly beginning to deteriorate meaningfully while strong housing data would warrant a hawkish reaction after the much better than expected Housing Starts print earlier this week.
From there, focus will turn to the Fed as Chair Powell continues his semi-annual Congressional testimony at 10:00 a.m. ET while Mester will speak around the same time (10:00 a.m. ET).
Finally, there is a 5-Yr TIPS auction at 1:00 p.m. ET that could offer insight to inflation expectations and move yields, but most of the market-moving news will likely hit before the lunch hour today.
What’s in Today’s Report:
Futures are flat as investors digest a disappointing earnings forecast by FDX (down 3% premarket) and a hotter than expected inflation print overseas as focus turns to Powell’s testimony on Capitol Hill today.
U.K. CPI held steady at 8.7% vs. (E) 8.4% y/y in May which saw the odds of a 50 bp BOE hike tomorrow jump to 50% which is weighing modestly on bonds this morning.
There are no notable economic reports in the U.S. today which will leave investors focused on Powell’s semiannual testimony before Congress which begins at 10:00 a.m. ET. Investors will be looking for any clarity on the Fed’s future policy plans as the markets currently do not believe the FOMC’s dot plot showing two more rate hikes before year end.
Outside of the D.C., there are several other Fed speakers to watch including: Cook (10:00 a.m. ET), Jefferson (10:00 a.m. ET), Goolsbee (12:25 p.m. ET), and Mester (E: 4:00 p.m. ET). Again markets will be looking for any clarity on rate hiking plans following the June “skip.”
Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could impact yields and if we see yields move meaningfully higher, that will weigh on the high valuation sectors that have led the market higher this year.
What’s in Today’s Report:
Futures are lower to start the holiday-shortened trading week today with Asian markets underperforming as the latest Chinese stimulus efforts were seen as underwhelming while inflation trends in Europe remain favorable.
The PBOC lowered both the 1-Yr and 5-Yr prime loan rates by 10 bp overnight to 3.55% and 4.2%, respectively, but the cuts disappointed versus hopeful investor expectations given weak economic data lately, and markets traded with a risk-off tone in the wake of the announcements.
In Europe, German PPI fell to 1.0% vs. (E) 1.8% in May offering the latest evidence that the global disinflation trends remain intact.
Looking into today’s session, there is just one economic report to watch: Housing Starts (E: 1.40M) which shouldn’t move markets, and only one Fed speaker: Williams (11:45 a.m. ET).
With stocks overextended by multiple measures right now, there will likely be some degree of digestion of the latest leg higher in equity markets now that the June Fed decision and Friday’s massive options expiration are behind us. With that in mind, focus will begin to shift to Powell’s semi-annual Monetary Policy Report to Congress which begins tomorrow as investors look for further insight to the Fed’s future policy plans.