Morning Minutes

Stocks Pop On More Signs of Slowing Inflation




US index futures have rallied on another improved US inflation report, gaining 1.1% to 2.8% with the NASDAQ leading the charge upward. The US 10-year treasury yield has dropped back toward 3.8% and the US Dollar is backsliding again, losing 0.6% to Gold and the Canadian Dollar and dropping 1.1% against the Euro. Commodity action is mixed with natural gas up 1.3% and copper up 0.5% but WTI crude oil down 0.4%.

The US Producer Price Index (8.0% vs street 8.3% and previous 8.5%), and Core PPI (6.7% vs street 7.2%), both came in better than expected, indicating inflation pressures are easing and adding to the case for a slowing of the pace of interest rate hikes expressed by Fed Vice Chair Brainard yesterday. The Empire State Manufacturing Index also beat expectations (+4.5 vs street -5.0). In Canada today, Manufacturing Salles (0.0% vs street -0.5%) and Wholedale Sales (+0.1 vs street -0.2%) also beat expectations. Tomorrow brings US retail sales, Canada consumer prices, Canada housing starts US industrial production, and the US NAHB housing market index.  

Economic data has also picked up overseas this morning. Numbers out of China were disappointing with retail sales (-0.5% vs street 1.0%) and industrial production (5.0% vs street 5.2%) both falling short of expectations. More inflation data from overseas is on the way with China house prices due overnight followed by UK consumer, producer, and retail price reports tomorrow.

Earnings week from big cap US retailers has kicked off this morning on an upbeat note. Home Depot ($4.24 vs street $4.12) and Walmart ($1.50 vs street $1.32, up 6.5% premarket) both handily beat street expectations.  Tomorrow brings results from Target and Lowes plus tech giants Nvidia and Cisco Systems.

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Colin Cieszynski, Chief Market Strategist

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

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