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What Is Dow Theory Saying Now?

What’s in Today’s Report:

  • What is Dow Theory Saying Now
  • 10’s-2’s Yield Spread and Bank Stock Outlook (Post Powell’s Press Conference)

Futures are bouncing slightly ahead of the jobs report and following yesterday’s modest declines.  Generally it was a quiet night of news.

EU Core HICP (their CPI) was stronger than expected, rising 1.2% vs. (E) 1.0% and incrementally added to the modest hawkish shift in the global central bank outlook following Powell’s press conference.

Today the headline numbers are the Employment Situation Report (Jobs: 180K, UE: 3.8%, Wages: 0.2% m/m) and the ISM Non-Manufacturing PMI (E: 57.3).  If the jobs number is very strong (job adds above 250k, UE below 3.7% and wages above 3.5% yoy, that might cause a decent sell off given Powell’s hawkish surprise on Wednesday, but barring that it shouldn’t impact markets too much.

Absent a jobs report surprise, the two biggest events today are comments by Fed Vice Chair Clarida (11:30 a.m. ET) and Williams (1:45 a.m. ET).  Specifically markets will be looking to see whether they echo Powell’s “transitory” comments about inflation, or if they sound more concerned.  The former will pressure stocks, while the later might provide some relief.

Other Fed officials speaking today include: Evans (10:15 a.m. ET), Bowman (3:00 p.m. ET) and after the market close: Bullard, Daly, Kaplan, Mester.