Morning Minutes

Inflation, Earnings and an Acquisition In the News

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Equity markets, which had been bouncing back overnight, have turned sharply back downward following reports that inflation remains stubbornly high, keeping the pressure on central banks to remain hawkish. US producer prices were higher than expected over a year ago (8.5% vs street 8.4% and previous 8.7%) and over a month ago (0.4% vs street 0.2%).

Prior to the producer price announcement, US index futures were up 0.7% to 1.0% but they dropped off following the announcement and are now up 0.2% to 0.3%. Bond prices are also falling as the US 10-year treasury note yield takes another run up above 3.95%. There is a US 10-year treasury bond auction at noon EDT today which could attract attention from investors.   

Monetary policy remains in the news. The Bank of England announced overnight that it plans to end its recent emergency QE program on Friday, sparking a rally in the Pound which is now up 0.7% today while other major currencies are essentially flat. Minutes from the last Fed meeting are due at 2:00 pm EDT today which investors may analyze for any cracks (or not) in the US central bank’s hawkish stance.

Earnings season kicked off this morning on a positive note with Pepsico beating the street on earnings ($1.97 vs street $1.84). In what could potentially become a theme of this earnings season, management attributed the positive results to being able to pass through cost increases through price increases to customers.

Uranium miner Cameco and Brookfield Renewable Partners announced overnight that they have agreed to purchase Westinghouse Electric, a provider of services and equipment to nuclear plants, for $7.9B including debt. As is common for purchasers due to increased transaction, integration and other deal-related risks, Cameco is down 2.9% in premarket action today.

Metal prices are sliding this morning with Copper down 1.2% and Gold down 0.7%. Energy prices are mixed with WTI crude oil down 0.4% and natural gas up 1.6%.

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Colin Cieszynski, Chief Market Strategist

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

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