US index futures are up to start the new month with gains this morning of 0.1% to 0.3%. These appear moderate, however, which compared with Tuesday’s declines of 0.4% to 0.6% for US indices. Overseas trading has been mixed with the Nikkei up 0.6%, the Dax up 0.2%, the FTSE down 0.1% and the Hang Seng down 0.5%.
Monetary policy is top of mind for investors today with the Bank of Canada widely expected to announce a second 0.5% interest rate hike at 10:00 am EDT this morning and perhaps provide guidance related to future moves in its statement. Today’s news from Canada may indicate how much pressure the Fed is under to follow suit on monetary policy when it meets later this month. Meanwhile, the US 10-year treasury note yield continues to creep back upward, rising back above 2.85%. The US Dollar is also catching a tailwind today, gaining 0.8% against gold, 0.4% against Bitcoin and 0.2% against the Euro and Pound.
WTI and Brent crude oil are up 0.7% and 0.9% this morning amid a maelstrom of energy market related developments. So far this week, the EU has announced new sanctions against Russian supply while China has started to reopen, potentially shoring up demand. OPEC+ is holding its monthly meeting tomorrow. While the group had been expected to stay the course on restoring production, reports circulated in the media yesterday suggesting the group may be considering what to do, if anything about Russian exports are disrupted by sanctions or other factors.
Manufacturing PMI reports from around the world have been rolling out overnight and into this morning. China remained in contraction territory but showed improvement, while reports out of Europe tended to be slightly better than expected on balance and indicative of moderate economic growth.
Canadian Manufacturing PMI is due at 9:30 am EDT this morning (street 57.6 vs previous 56.2). US ISM Manufacturing PMI is due at 10:00 am today. While the headline number (street 54.5 vs previous 55.4) may capture the headlines, investors may also look at the prices paid component (street 83.0 vs previous 84.6) for signs of whether inflation pressures are increasing, levelling off, or decreasing. US construction spending (street 0.5% vs previous 0.1%) is also due at 10:00 am EDT. Later in the day, FOMC members Williams and Bullard are speaking and the Beige Book regional economic report is coming at 2:00 pm EDT.