Morning Minutes

Investors Digest Central Bank Pauses and Strong Earnings While Awaiting Payrolls




This week’s rebound in equity markets has continued into this morning with US index futures up 0.35%-0.95%, building on yesterday’s US index gains of 0.6%-1.6%. Over in Europe, the Dax is up 1.6% while the FTSE is up 1.2%.

Investors appear to be responding favorably to central banks continuing their pause parade with the Fed (yesterday afternoon) and the Bank of England (this morning) both deciding to keep their current benchmark rates on hold. The US 10-year treasury note yield has dropped back toward 4.70%, while the 10-year German Bund yield has slipped back toward 2.70%. The US Dollar has gone into retreat this morning enabling the Euro, Loonie and Pound to rally 0.4% to 0.7%. Meanwhile Gold is up 0.4% and Bitcoin is up 2.2%. In commodity action, US Crude Oil is up 1.2%, while Copper is up 0.5%.

Another flood of earnings reports has come out overnight and into this morning on both sides of the border. Several stocks are soaring this morning on the back of positive earnings reports, including Shopify ($0.24 vs street $0.15, up 16.5% premarket), Starbucks ($1.08 vs street $0.97, up 8.5% premarket), Qualcomm ($2.02 vs street $1.91, up 6.1% premarket), and PayPal ($1.30 vs street $1.23, up 6.8% premarket). On the other hand, Peloton is down 7.0% premarket  following another disappointment. After the close today, results are due from Apple and Booking Holdings.

US weekly initial jobless claims were slightly worse than expectations (217K vs street 210K). US Factory Orders (street 2.3%) are due at 10:00 am EDT. Tomorrow brings US nonfarm payrolls (street 180K vs previous 336K), and Canada employment (street 22K vs previous 64K). Investors may look to the headline numbers as a sign of the health of the economy but wage inflation numbers for the US (street 4.0%) and Canada (previous 5.3%) may indicate how “sticky” inflation could be, particularly with unions demanding and getting big wage increases due to higher inflation, and what this may mean for monetary policy moving forward.

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Colin Cieszynski, Chief Market Strategist

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

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