What to Make of Yesterday’s Selloff
What’s in Today’s Report:
- What to Make of Yesterday’s Selloff
- OPEC+ Policy Update and Oil Outlook
Price action is mixed across asset classes this morning as equity futures are cautiously rebounding with EU shares but bond yields made new lows amid lingering Delta variant fears.
Economically, German PPI fell to 1.3% vs. (E) 1.1% in June, down from 1.5% in May which offers some new support for the transitory inflation thesis.
Economically, there is one report on the real estate market today: Housing Starts and Permits (E: 1.590M, 1.700M) but it should not have an impact on stocks or bonds, and no Fed officials are scheduled to speak.
That will leave trader focus on earnings early with: ALLY ($1.49), PM ($1.54), TRV ($2.35), and SYF ($1.51) reporting Q2 results ahead of the bell and NFLX ($3.16), UAL (-$4.17), IBKR ($0.83) reporting after the close.
Outside of those potential catalysts, the broader market focus remains on the latest developments regarding the Delta-variant of COVID-19 and any subsequent restrictions or lockdowns that may be announced around the globe.
As has been the case in recent weeks, the stock market will likely react to moves in bonds, so if yields begin to extend this morning’s early drop amid new risk-off money flows, expect volatility to remain elevated. Conversely, if bond yields begin to recover meaningfully, then stocks would likely follow, potentially rising back towards Friday’s closing levels.
