Over the weekend, Moody’s cut its rating on US debt to Aa1 from AAA, and on Monday, markets showed resilience in the face of this news. US stock markets finished flat to up 0.2%, clawing back early losses. The US 10-year treasury note yield rallied up to 5.00% then settled back toward 4.45% where it finished last week.
This morning, US index futures are trading flat to down 0.3%, though we have seen several soft starts during the current market advance. Over in Europe, the Dax and FTSE are both up about 0.6%, and overnight, the Hang Seng gained 1.5%. Gold has stabilized, and currency trading is quiet. In commodity action, Copper is down 0.6% and Crude Oil is down 0.2%.
Earnings season for retailers resumes this morning. Home Depot is up 2.0% premarket trading despite missing on earnings ($3.56 vs Street $3.60) as management maintained its guidance for the year and noted it has no plans to raise prices due to tariffs. Tomorrow brings results from Lowes, Target, and TJX Companies. TD Bank gets a head start on Canadian bank earnings on Thursday, with the rest scheduled to report results next week.
Five Fed officials are speaking today. Investors may watch for confirmation or rejection of comments from Atlanta Fed President Bostic yesterday, who suggested the US central bank may only cut interest rates once this year, a hawkish break from the party line of two cuts forecast for this year. The Reserve Bank of Australia cut its overnight rate by 0.25% overnight to 3.85%, and the People’s Bank of China cut its benchmark rate by 0.10% to 3.00%. Both cuts had been widely expected. It’s a relatively quiet week for economic news, headlined by Canada consumer prices today, Flash PMI reports on Thursday, and retail sales numbers for Canada and the UK on Friday.