“Bottom line, banks have reemerged as the primary influence on markets in the back half of the week and if the weakness in the sector continues today, stocks will have a very hard time extending yesterday’s modest bounce,” says Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Stock futures are little changed this morning while bond yields are moving higher with the 2-Yr Note yield notably trading above 4% as banking fears continue to ease although markets still remain on edge.
There were no market moving economic reports overnight and news wires were generally quiet.
Looking into today’s session, there are several economic reports due to be released in the U.S. including: International Trade in Goods (E: -$90.0B), Case-Shiller Home Price Index (E: 3.7%), FHFA House Price Index (E: -0.2%), and Consumer Confidence (E: 101.0).
Shortly after the open, the Fed’s Barr will testify before the Senate beginning at 10:00 a.m. ET regarding the recent banking turmoil and state of the financial industry. Any negative comments or developments during the testimony that weighs on bank shares will very likely drag down the broader market.
Looking to the afternoon, there is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could impact the broader bond market and move stocks.
What’s in Today’s Report:
Futures are little changed despite the Swiss National Bank providing Credit Suisse (CS) liquidity, as that news isn’t eliminating general market anxiety.
Credit Suisse is rallying more than 20% pre-open after it was granted a $54 billion credit line from the Swiss National Bank.
Despite the positive CS news, investors remain very nervous and jittery about U.S. regional banks (especially FRC).
Today is an important day as there are numerous potentially market moving events this morning, with the most important being the ECB Decision (E: 50 bps hike). Markets will want to see the ECB “blink” in the face of market turmoil and hike less than 50 bps. If the ECB sticks to a 50 bps hike, don’t be shocked to see more volatility today.
Economically, the hope that the Fed “blinks” and does not hike 25 bps next week has helped support stock and bond markets this week, so investors will want to see today’s economic data come in soft enough to make no hike more likely next week. Key reports today are, in order of importance: Philly Fed (E: -15.8), Jobless Claims (E: 205K), Housing Starts (E: 1.315M).
What’s in Today’s Report:
Futures are slightly lower following Thursday’s steep afternoon selloff and as nervous investors look ahead to the jobs report.
Economically German CPI met expectations (8.7% y/y).
Silicon Valley Bank (SIVB), which is now at the heart of the crypto/VC bank turmoil, fell farther overnight and that stock needs to stabilize for markets to recoup yesterday’s losses.
Today there are two important events to watch.
The first is the jobs report, and expectations are as follows: E: 215K Job Adds, 3.4% Unemployment Rate, 0.3% m/m/4.7% yoy Wages. Especially after yesterday’s selloff, markets need a “Just Right” number to reduce rate hike expectations. Second, markets will be looking for a business update from SIVB about their capital raise and sustainability going forward, and if the bank shored up its finances, that would likely create a solid rally in stocks.
What’s in Today’s Report:
Futures are little changed following a quiet weekend and as investors look ahead to an important week of catalysts (Powell speeches and employment reports).
China released updated growth expectations for 2023 of “around 5%” and that’s slightly under estimates and was a mild disappointment.
Economic data was solid overnight as Euro Zone Retail Sales (1.0% vs. (E) 0.3%) and UK Construction PMI (54.6 vs. (E) 49.1) both beat estimates.
Today expect digestion of last week’s rally as there are no material economic reports or Fed speak, as markets look ahead to Powell’s testimony tomorrow.
What’s in Today’s Report:
Futures are little changed following a mostly quiet weekend of news as markets look ahead to tomorrow’s CPI report.
The only notable economic report overnight was better than expected growth and inflation updates from the European Commission, who now sees EU growth rising 0.9% this year (up from 0.3%) and inflation at 5.6% (down from the previous 6.1%). These revised estimates are helping to bolster the “No Landing” economic scenario.
Markets should mostly be in a holding pattern today as the CPI report looms tomorrow morning, but there are two notable events on the calendar to watch: New York Fed Inflation Expectations (One Year: 5.0%, Five-Year: 2.4%) and one Fed speaker: Bowman (8:00 a.m. ET). If inflation expectations are higher than before or Bowman is hawkish, that could mildly pressure stocks.
What’s in Today’s Report:
Futures are moderately lower following a hotter-than-expected Spanish CPI report and as markets look ahead to a week filled with potential market-moving events.
Spanish CPI rose 5.8% vs. (E) 4.8% y/y and that is challenging the idea that disinflation is accelerating, and stocks are dropping as a result.
Investors are also booking profits ahead of a key week of catalysts including Fed/ECB/BOE rate meetings, critical earnings reports (this is the most important week of earnings), and the monthly jobs report on Friday.
This week is very, very busy from an economic standpoint between the Fed on Wednesday, jobs report on Friday, ISM PMIs and key inflation readings. But, all the important reports start tomorrow so today’s focus will be on the earnings, and some notable reports today include NXPI ($3.60) and WHR ($3.43) which will give us insight into semi-conductor production (any more shortages?) and consumer demand.
What’s in Today’s Report:
U.S. stock futures are tracking global shares higher in moderate risk-on trading this morning as investors look past Powell’s lack of commentary of monetary policy plans yesterday and await tomorrow’s all-important CPI data.
Economically, Retail Sales reports in both Australia and Italy handily beat expectations overnight, adding to optimism for a global economic soft landing.
There are no market-moving economic reports today and no Fed officials are scheduled to speak.
That leaves just one potential market catalyst today, a 10-Yr Treasury Note auction at 1:00 p.m. ET. And while it is possible a surprise outcome in the auction moves yields and causes some modest moves in equities in the afternoon, the session is likely to be mostly quiet as traders position into the CPI report.
What’s in Today’s Report:
Futures are little changed ahead of the jobs report and following mixed European economic data.
EU HICP (their CPI) was disappointing on balance as the headline rose less than expected (9.2% vs. (E) 9.5%) but the more important Core HICP gained 5.2% vs. (E) 5.0%. This report partially refutes the encouraging inflation data from earlier this week.
Today focus will be on the Jobs Report and expectations are as follows: Job Adds 200K, UE Rate 3.7%, Wages 0.4% m/m, 5.0% y/y. If we get another solid number above 200k, expect more weakness in stocks and bonds as that will be viewed as “hawkish” data, while a job adds number close to 100k could spark a sharp rally, given yesterday’s declines.
The jobs report isn’t the only important economic report today, however, as the ISM Services Index (E: 55.0) is released later this morning. Markets will want to see a moderation in both the headline and prices readings.
Finally, there are three Fed speakers today: Cook (11:15 a.m. ET), Bostic (11:15 a.m. and 3:30 p.m. ET), and Barkin (12:15 p.m. ET).
What’s in Today’s Report:
Markets are trading with a risk-on tone this morning following favorable economic data overnight while traders look ahead to today’s domestic data and the release of the Fed minutes.
Economically, France’s December CPI headline fell to 5.9% vs. (E) 6.3% y/y while Composite PMI headlines across Europe were revised solidly higher from the Flash prints. Those data points indicate a faster drop in inflation and more resilient economic activity which bolsters the prospects of a soft landing.
Looking into today’s session, we get a few notable economic reports this morning including: Motor Vehicle Sales (E: 13.7 million), ISM Manufacturing Index (E: 48.0), and JOLTS (10.1 million) before the focus will turn to the release of the December FOMC Meeting Minutes at 2:00 p.m. ET.
Bottom line, optimism about quickly retreating inflation rates overseas and better-than-feared growth readings are driving risk-on money flows overseas today and if we see more of the same in the U.S. data today, that can continue. Regarding the Fed Minutes, any positive mention about progress on getting inflation under control will be well received and could see the pre-market gains extended into the afternoon.