“Powell has a tough job ahead of him. The market is pricing in a 97% chance of a July rate cut, and a 75% chance of one in September.” says the Seven Report’s Tom Essaye. Click here to read the full MarketWatch article.
What’s in Today’s Report:
Futures are marginally higher thanks to continued momentum from yesterday’s dovish rally.
Economic data was sparse overnight as the only notable number was German CPI, which met expectations at 1.6% yoy.
Today will be a busy day. First, we get the 2nd half of Powell’s testimony in front of the Senate Banking Committee at 10:00 a.m. ET, but that shouldn’t yield any surprises as it’s mostly a repeat of yesterday.
The ECB Minutes will be released at 7:30 a.m. ET and if they hint at a re-start of QE (which they probably will) then we might see an extensions of this “dovish” rally.
On the data front, CPI (E: 0.0%) and Jobless Claims (E: 216K) both get released later this morning but given the flood of dovishness inundating markets right now from global central banks, it’d take a very strong CPI and very high jobless claims to hit stocks.
Finally, there are multiple Fed speakers today besides Powell, but they are all generally overshadowed by the comments yesterday so the market should largely ignore their speeches. Today’s roster includes: Williams (11:00 a.m., 1:30 p.m. ET), Quarles (1:30 p.m. ET), Kashkari (5:00 p.m. ET).
What’s in Today’s Report:
Futures are lower with most international markets as investors look ahead to Powell’s testimony while another EU company, PageGroup, issued a profit warning overnight.
Economically, Chinese June CPI was inline but PPI dropped from 0.6% to 0.0% vs. (E) 0.2% which rekindled deflationary concerns and underscored pressures on the Chinese manufacturing sector.
Today, there are no economic reports but even if there were, focus would be primarily on the Fed anyway.
Powell’s Testimony before Congress is clearly the main event as investors look for further clues on the future of monetary policy. His written comments are due out at 8:30 a.m. ET before he begins to speak at 10:00 a.m. ET.
Bullard also speaks at 1:30 p.m. ET today and the June FOMC Meeting Minutes will hit the wires at 2:00 p.m. ET.
Lastly, there is a 10 Year T-Note Auction at 1:00 p.m. ET and depending on the results (demand metrics and yields) a reactive move in the bond market could influence stock trading in the midst of all the Fed events.
The price action, “confirms that last week’s rally was driven by falling yields and growing dovish hopes,” rather than faith in the ongoing strength of the U.S. economy, wrote Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally lower as markets digest Wednesday’s new highs ahead of the jobs report.
Trading Thursday was quiet globally as there was no notable news, and most foreign indices were little changed.
Economic data continued to disappoint, as German Factory Orders became the latest manufacturing reading to badly miss estimates (-2.2% vs. (E) 0.2%).
Today focus will be on the Employment Situation Report and estimates are as follows: Jobs (E): 165k, Unemployment Rate (E): 3.6%, Wages (E): 3.2%. As we saw on Wednesday (and really all week) slightly disappointing or better than expected data will likely result in the S&P 500 trading above 3000, while a very strong or very weak number will likely hit stocks.
For now, markets are convinced collapsing global bond yields are just reflective of impending dovish central bank policies, and until data gets bad enough to cause worries about the economy, those lower yields will be a short term tailwind on stocks (but longer term problem, according to history).
What’s in Today’s Report:
Futures are rising with EU shares this morning as investors welcome news that Christine Lagarde (largely viewed as a dove) will likely succeed Mario Draghi as ECB President.
In the bond market, global yields hit new lows overnight (the 10-Yr touched 1.94%) on the dovish Lagarde news, but also as China’s June Composite PMI fell to 50.6 from 51.5 in May. The EU data was slightly better than expected, however, which has helped yields stabilize this morning.
Gold is also notably higher by 1.43% today and futures tested recently established multi-year highs overnight thanks to the dovish money flows.
Markets close at 1:00 p.m. today however there are multiple economic reports due out in the U.S. that warrant watching as they have the potential to move markets: ADP Employment Report (E: 140K), International Trade (E: -$53.4B), Jobless Claims (E: 220K), Factory Orders (E: -0.5%), and the ISM Non-Manufacturing Index (E: 55.8).
“The trade truce is a positive and the policy extension by OPEC+ keeps the supply side argument in favor of the bulls, but there remain too many unknowns about…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
U.S. stock futures are slightly lower this morning as investors continue to digest the G20 “trade truce” against further deteriorating global economic data so far this week while news flows overnight were very slow.
Economic data overnight was largely Goldilocks with German Retail Sales coming in at -0.6% vs. (E) 0.7% (but revisions were positive) while Eurozone PPI was -0.1% vs. (E) 0.0%. Additionally, the RBA cut rates, as expected.
Looking into today’s session the only economic data coming out today is Motor Vehicle Sales (E: 17.0M) while there is just one Fed official scheduled to speak: Mester (11:00 a.m. ET).
That will likely make for a quiet session as traders look ahead to U.S. jobs data due out later in the week while trading schedules are non-typical thanks to the 4th of July holiday on Thursday.
What’s in Today’s Report:
Futures are modestly positive again this morning on more U.S.—China trade optimism.
President Trump said he thought talks with President Xi would be “productive” and that’s boosting futures.
Economic data largely met expectation although Japanese IP (2.3% vs. (E) 0.3%) and EU HICP (their CPI) slightly beat estimates (1.1% vs. 1.0% yoy).
Focus will clearly be on the looming Trump/Xi meeting but there’s an important economic data point to watch today: Core PCE Price Index (E: 0.1% m/m, 1.5% y/y). If that shows inflation that’s stronger than estimates, it’ll reduce the chances of a rate cut (bad for stocks), while a soft number will result in a “bad is good” reaction in markets.
“For now what the bond market is doing is signaling the chances of a recession are more likely than the chances of a renewal of the expansion,” said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
