Treasury yields continue their ascent this morning. The US 10-year Treasury Note Yield has climbed up above 5.00% for the first time since 2007, while the German 30-year Bund is approaching 3.00% once again. With monetary headwinds still in place, stock markets around the world have been falling to start the new trading week.
Adding to Friday’s US index losses of 0.9% to 1.5%, US index futures are all down about 0.4% this morning. Overseas, the Dax, Hang Seng and Nikkei are all down about 0.7%, while the FTSE is down 0.5%. With aid convoys entering Gaza over the weekend, WTI and Brent Crude Oil are down 0.3%-0.4%, and Gold is down 0.2%. As tensions remain high and the situation remains volatile, potentially changing at any moment.
The bigger news in the oil patch today is the announcement that Chevron has agreed to acquire Hess Corp. for $53B in a friendly, all-cash deal, enabling Chevron to increase its presence in Guyana. This is the second time Big Oil has gone shopping for growth in less than a month. Exxon Mobil agreed to purchase Pioneer Natural Resources to bolster its presence in the US. The arrival of a second big deal in less than two weeks may add to market speculation that a new round of consolidation in the Energy industry may be getting started. Both purchasers report earnings on Friday.
It’s a quiet day for earnings reports, although the impact of results has been very selective this quarter. Although Netflix was able to stage a big bounce last week, on Friday, American Express fell 5.8% despite an earnings beat and an upbeat earnings call. Lots of big US companies are reporting results this week headlined by Microsoft, Alphabet, Visa and Coca-Cola on Tuesday; Meta Platforms, Boeing and IBM on Wednesday; Mastercard, Merck, Amazon.com, Intel, Caterpillar and UPS on Thursday and Abbvie on Friday. Canadian earnings season gets underway this week headlined by Canadian National and Teck Resources on Tuesday, Canadian Pacific and Agnico-Eagle on Wednesday and Imperial Oil on Friday.
The two main economic events for this week are the release of Flash PMI reports from around the world tonight and tomorrow morning, and Wednesday’s Bank of Canada meeting (5.00% no change expected). Investors may look to the news and any accompanying commentary for insights into inflation, the global economy and what central bankers are thinking heading toward next week’s Fed meeting.
