Morning Minutes

Markets Await Monetary and Earnings Developments




The new trading week is off to a positive start this morning. US Index futures are trading flat to up 0.2% with NASDAQ futures strengthening as the day has progressed. Meanwhile in Europe, the Dax is up 0.7% and the FTSE is up 0.5%. Commodity action is also split with Natural Gas up 3.2% while WTI Crude Oil and Copper are both down 0.7%.

The most interesting move of the day is the US 10-year treasury note yield climbing back up above 4.00%, reflecting a growing sense that central banks may need to continue their fight against inflation, particularly with economies remaining resilient and the sticky parts of inflation (wages and services) remaining stubbornly higher.

The first part of this week is dominated by monetary policy related news. Chinese inflation reports were benign, but the main focus for inflation watchers is on the US Consumer and Producer Price reports due Wednesday and Thursday. On Wednesday, the Bank of Canada is expected to announce a 0.25% rate hike, while the Reserve Bank of New Zealand, who has been the lead domino in this monetary tightening cycle, is expected to pause. A number of central bankers are speaking today including three Fed Members and the Governor of the Bank of England later this morning.

Later this week, earnings season kicks off with results from Pepsico on Thursday followed by a wave of big banks on Friday. Confession season continues to be quiet but with the possibility that investors may focus more on second half guidance anyway, the coming weeks have the potential to be quite active as results roll out, and current trading may be the calm before the storm.

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Colin Cieszynski, Chief Market Strategist

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

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