Posts

FOMC Preview

/in /by

What’s in Today’s Report:

  • FOMC Preview (Wildcard to Watch)
  • What Do Rising Treasury Yields Really Mean?

S&P 500 futures are down roughly 1% this morning tracking European shares lower after German trade data showed a much larger than anticipated drop in exports during the depths of the COVID-19 pandemic in April.

Eurozone GDP and the NFIB Small Business Optimism Index slightly beat expectations however German exports declined by the most on record in April, tumbling by -24.0% on the month which is weighing heavily on EU shares today.

Looking into today’s session, there are two lesser followed economic reports due to be released: April JOLTS (E: 5.750M) and Wholesale Trade (E: 0.4%) which are not likely to move markets while there are no Fed speakers as the June FOMC Meeting Begins today.

With tomorrow’s Fed announcement and Powell’s press conference coming into focus, it is possible we see a continued wave of profit taking today, especially given the disappointing economic data out of Europe, however a sense of “Fed paralysis” should keep the losses somewhat limited.

Tom Essaye Quoted in CNBC on September 23, 2019

/in /by

“These are not good numbers and they do not imply global economic stabilization is occurring,” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.

Treasury Chart

Are Cyclical Sectors Set To Rebound?

/in /by

What’s in Today’s Report:

  • Are Cyclical Sectors Set To Rebound?  (They Did Yesterday)

It’s green across the screen this morning but the gains are modest as more positive commentary on U.S./China trade and decent economic data  are supporting markets.

On trade, Treasury Secretary Mnuchin said talks have been “productive” but gave no further details.

Economically, German Retail Sales beat estimates rising 0.9% vs. (E) -1.0%, making it two days in a row of better than expected EU data.

In normal times, today the key data point would be the Core PCE Price Index (E: 0.2% m/m, 1.9% y/y) as that’s the Fed’s preferred measure of inflation.  And, if it ran hot or cold, it would have an impact on perceived Fed policy.  In today’s market, however, it’s take a massive (and almost impossible) move in that price index to change expected Fed policy, so this number likely won’t move markets.  Other notable events today include New Home Sales (E: 615k) and one Fed Speaker:  Kaplan (10:30 a.m.).

Bottom line, this market remains driven by Treasury yields.  They are over extended to the downside and rose slightly yesterday and that helped stocks – and if we see a further rise in yields today ahead of the Chinese PMIs on Sunday, that could boost markets into the weekend.