“Republican Representatives have said this morning that they have the votes to pass it. If that comes to fruition, that should remove a headwind from risk assets and open the door to a continued move higher in equity markets,” writes Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed as markets digest the Thursday/Friday rally amidst a mostly quiet weekend of news.
Oil prices are solidly higher (Brent crude up 1.7%) after Saudi Arabia announced a voluntary 1M bpd production cut for the next month, although that’s not seen as a sustainable bullish catalyst.
Economically, global service PMIs were mixed as the Euro Zone Service PMI missed expectations (55.1 vs. (E) 55.9) while the UK and Chinese service PMIs were in-line.
Today focus will be on the ISM Services Index (E: 52.0.) and specifically the price index in this report. Last week, a sharp drop in the ISM Manufacturing PMI Prices Paid Index ignited the rally, and if we see a similar drop in the services price index, it’ll help extend the rally as markets will get more confident disinflation is accelerating.
“Yes, AI does have great potential and it does appear to be the ‘next big thing’,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period.” Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher after the House of Representatives passed the debt ceiling extension.
The House passed the debt ceiling extension 314-117, effectively ending this drama (passage in the Senate is all but guaranteed).
Economically, EU Core HICP (their core CPI) rose 5.3% vs. (E) 5.5%, hinting at the re-start of disinflation.
Today focus will be on economic data and there are numerous potentially important reports, starting with the ISM Manufacturing PMI (E: 47.0), where markets will want to see stability in the data (so not dramatically above or below the expectation). On employment, we get two important reports via the ADP Employment Report (E: 160K) and Jobless Claims (E: 235K), and moderation in both reports (so a drop in ADP and rise in claims) will be welcomed by markets. Finally, on inflation, Unit Labor Costs (E: 6.3%) will give us the latest insight into wages (the lower this number, the better). Finally, there is also one Fed speaker: Harker (1:00 p.m. ET).
What’s in Today’s Report:
Stock futures are modestly lower this morning as soft Composite PMI data in China overshadowed easing inflation numbers in Europe overnight while traders await a House vote on the new debt-limit bill.
China’s Composite PMI fell to 52.9 in May down from 54.4 in April which confirmed that the economic recovery in the world’s second largest economy is underwhelming investor expectations which were admittedly lofty coming into the year.
In Europe, French CPI dropped to 5.1% vs. (E) 5.7% y/y in May and PPI plunged to 7.0% vs. (E) 12.8% which is driving some less-hawkish money flows this morning, supporting a bid in global bond markets.
Looking into today’s session, there are two economic reports to watch: Chicago PMI (E: 47.0) and JOLTS (E: 9.35 million). Investors will want to see some moderation in the data but still not a sharp drop-off in either growth or employment as that would rekindle worries of a hard landing and weigh on risk assets.
There are also multiple Fed speakers including: Collins (8:50 a.m. ET, 12:20 p.m. ET), Harker (1:30 p.m. ET) and Jefferson (1:30 p.m. ET). And given the hawkish shift in Fed rate hike odds over the last few days, a more dovish leaning tone from any of the policy makers would be well received.
Finally, the House is set to vote on the debt limit bill today and Republican Representatives have said this morning that they have the votes to pass it. If that comes to fruition, that should remove a headwind from risk assets and open the door to a continued move higher in equity markets.
What’s in Today’s Report:
Stock futures are higher and Treasury yields are falling this morning amid renewed optimism for a debt ceiling deal.
President Biden and Speaker McCarthy agreed in principle to a two-year debt ceiling extension, which markets expect to be signed before the June 5th “X date.”
Eurozone Economic Sentiment dropped to 96.5 vs. (E) 99.4, underscoring worries about growth overseas but the debt ceiling deal optimism is overshadowing worries about the economy this morning.
Today, there are several economic reports to watch including the Case-Shiller Home Price Index (E: -0.1%), FHFA House Price Index (E: 0.3%), and Consumer Confidence (E: 100.0).
Additionally, there is one Fed speaker: Barkin (1:00 p.m. ET), however investors will remain primarily focused on the debt ceiling deal and as long as news flow surrounding the final negotiations remains positive, risk on money flows should continue today.
On a similar note, Sevens Report Research founder Tom Essaye said that “from a technical perspective, there are signs that a potential bottom for the dollar has been formed.” Click here to ad the full article.
The natural-gas market is reaching a historically pivotal phase of the year, with the price swings typically occurring in the summer and winter months, said Tyler Richey, co-editor at Sevens Report Research. Natural gas is the largest source of electricity in the U.S., at roughly 40%, so when temperatures heat up in the summertime, demand for power to run air conditioning units rises in lockstep. Click here to read the full article.
What’s in Today’s Report:
S&P 500 futures are solidly higher while Nasdaq futures surge 2% thanks to blow out NVDA earnings.
NVDA beat on revenue and EPS and raised guidance on strong AI chip demand, and the stock surged more than 20% after hours.
Fitch put the U.S. on “credit watch negative” as the potential “X” date for the debt ceiling is less than a week away.
Today focus will be on any debt ceiling progress (although none is expected with the looming holiday weekend) and on economic data, and the most important report is Jobless Claims (E: 248K) and markets will want to see that number flat or just slightly higher (another big jump would increase hard landing worries).
Other data today includes Revised Q1 GDP (E: 1.1%) and Pending Home Sales (E: 1.1%), but neither number should move markets. On the Fed, we have two speakers today, Barkin (9:50 a.m. ET) and Collins (10:30 a.m. ET), but neither should move markets.
The U.S. dollar, which rallied to a two-month high last week, is demonstrating a bullish signal from a technical perspective and has the potential to trend up in the coming months. The greenback’s strength will weigh on equities, starting by the beginning of June, noted Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
