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What’s in Today’s Report:

  • Jobs Report Preview

Futures are rebounding very slightly following better than expected global service PMIs.

The December Chinese Service PMI handily beat estimates (52.9 vs. (E) 51.6) offering an encouraging signal on Chinese growth while the EU and UK services PMIs also slightly best estimates.

On inflation, data was more mixed as French CPI met estimates at 3.7% but rose slightly from last month challenging the disinflation narrative.

Today focus will be on economic data and specifically the labor market via Jobless Claims (E: 218K) and the ADP Employment Report (E: 115K) and the key here remains Goldilocks data that isn’t so strong it reduces rate cut expectations nor so bad it stirs worries about the economy.  Also, we get the December PMI Composite Index (E: 51.0) but barring a major surprise that shouldn’t move markets.

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ISM Data Points To Rising Odds of a Hard Landing

What’s in Today’s Report:

  • Trading Color – Quarterly Rebalancing Helps Improve Breadth
  • ISM Manufacturing Index Takeaways – Not a Good Report
  • If the Yield Curve Is Right, The U.S. Economy Will Roll Over Hard

U.S. equity futures are tracking global markets lower this morning after more disappointing PMI data overnight.

Economically, China’s June Composite PMI dropped to 52.5 from 55.6 in May with the Services Index notably missing estimates at 53.9 vs. (E) 55.9. Meanwhile, the Eurozone Composite PMI fell into contraction at 49.9 vs. (E) 50.3.

Looking into today’s session, there are two economic reports to watch: Motor Vehicle Sales (E: 15.3 million) and Factory Orders (E: 0.9%), although barring any huge surprises, neither should materially move markets ahead of the Service PMI data and June jobs report due later in the week.

From there, focus will turn to the release of the June FOMC Meeting Minutes at 2:00 p.m. ET as markets look for further clarity on the Fed’s commitment to raising rates further in H2’23 (a hawkish interpretation would weight on risk assets).

Finally, there is one Fed speaker: Williams but not until the closing bell at 4:00 p.m. ET so any impact by his comments will likely not be realized until tomorrow.

What Could Send Stocks Higher from Here (Three Factors)

What’s in Today’s Report:

  • What Could Send Stocks Higher from Here (Three Factors)

Futures are slightly higher as comments by San Francisco Fed President Daly are being interpreted as slightly dovish. San Francisco Fed President Daly spoke after the close Thursday and said that Wednesday’s CPI was a “welcome sign” that could lead to a “slowing” in the pace of rate hikes (to 50 bps in September, not 75 bps).

Economic data was better than expected as both UK and EU Industrial Production slightly beat estimates.

Today focus will be on the University of Michigan 5-Year Inflation Expectations (E: 2.9%) as that’s the first inflation reading in August, and if it drops below expectations we should see a continued tailwind on stocks.

Updated Near-Term Market Outlook

What’s in Today’s Report:

  • Updated Near-Term Market Outlook
  • Weekly Economic Cheat Sheet

U.S. stock futures are trading higher with European shares amid renewed hopes of a ceasefire in Ukraine while Asian markets declined overnight on new Covid-19 lockdowns.

Geopolitically, Russia continued with aggressive military attacks against Ukraine over the weekend but diplomatic negotiators noted solid progress in ceasefire discussions which is helping risk assets bounce this morning.

There are no economic reports today and no Fed officials are scheduled to speak.

The Treasury will hold an auction for both 3-month and 6-month Bills at 11:30 a.m. ET today which may shed some light on the market’s current outlook for near-term Fed policy. And if shorter duration rates rise in the wake of the auctions, that could weigh on stocks as the Fed meeting comes into focus.

Bottom line, markets are still very much focused on Russia and Ukraine right now and for stocks to meaningfully bounce today, we will need to see real progress towards a ceasefire. Conversely, a deteriorating situation in Ukraine could see stocks retest multi-month lows to start the week today.

What’s Next for Markets

What’s in Today’s Report:

  • Why We Still Think Stocks Are in a Trading Range (And We’re Near the Top)
  • Two Indicators That Would Make Us More Bullish on Stocks (In the Currency & Bond Section)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

Futures are flat following a very quiet weekend of no incremental news (the weekend news flow was similar to the scoring in the first half of the super bowl).

The only notable economic report was Chinese Service PMI which met expectations at 53.6 vs. (E) 53.9.  But, the composite PMI still dropped to 50.9 vs. the previous 52.2 so there are still legitimate reasons to worry about Chinese, and global, economic growth.

Today there are no notable economic reports and the only notable earnings report comes after the close (GOOGL ($11.08)) so I’d expect a generally quiet trading day as investors digest the recent rally/news.

Is the Corporate Bond Bubble Bursting?

What’s in Today’s Report:

  • Pullback Update: Why we think the 2650-2850 trading range is still intact.
  • Is the Corporate Bond Bubble Bursting?

Futures are enjoying a modest oversold bounce following a generally quiet night.

Italy will be in focus today as the European Commission will issue a decision on the resubmitted budget and rejection is likely.  Positively, however, there were some reports Italy would be open to negotiation on the proposed budget, and that helped fuel the bounce this morning.

There were no notable economic reports overnight.

Today should be a generally quiet day as travel picks up for the Thanksgiving holiday.  But, that said, there are three notable economic reports this morning: Durable Goods (E: -2.5%), Jobless Claims (E: 215k), Existing Home Sales (E: 5.21M).  Bottom line, tech remains key in the short term.  If Nasdaq and FDN can bounce, stocks can recoup some of the week’s losses.

Everyone please have a happy and safe Thanksgiving!