Morning Minutes

Big Merger Deal Today in the US Oil Patch




The Energy sector has moved back into the spotlight with the announcement that ExxonMobil (XOM) has agreed to merge with Pioneer Natural Resources (PXD) in an all-stock deal valued at $60 Billion. ExxonMobil is down 2.5% in premarket trading which is not unusual as purchasers are often marked down in the short term for taking on transaction and integration related risks. On this news, Pioneer is up 1.5% premarket trading and it’s possible that this deal could potentially ignite wider speculation that a new round of consolidation in the Energy sector may be getting underway.

US index futures are up 0.3%-0.4%, building on yesterday’s US index gains of 0.4%-0.6%. Despite a new war in Israel starting and Middle East tensions rising, WTI and Brent Crude Oil are both down about 1.0%, with the US price still holding above $85.00/bbl for now. Gold, however, continues to rebound, climbing 0.5% this morning, while Silver is up 1.1%.

Treasury yields are backsliding again this morning with the US 10-year treasury note yield drifting back toward 4.55%, and the German 10-year Bund yield slipping back toward 2.70%. Bonds and yields may be active this afternoon around the release of minutes from the last FOMC meeting at 2:00 pm EDT, but only if there is a surprise on new information since that particular meeting has already had a significant impact on trading.

US Producer prices (2.2% vs street 1.6% and previous 2.0%) came in higher than expected indicating inflation pressures remain persistent and the fight to get inflation back down likely isn’t over yet. The US Consumer Price Index (street 3.6% vs previous 3.7%) is due tomorrow morning.    

Earnings season, which started yesterday with Pepsico beating expectations, is quiet today but picks up as the week goes on with Delta Air Lines reporting tomorrow and then the official kickoff comes on Friday with JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, Blackrock and others reporting results.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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