Morning Minutes

Stocks Retreat, Treasury Yields Soar Around Earnings and Inflation Reports




On the surface, this morning’s trading appears to be a bit odd. Overnight earnings reports out of the US have been coming in better than expected but as the morning has progressed, US index futures have given up their overnight gains and slipped back into the red with current declines of about 0.3% for the three main contracts.

Traders have responded positively to better-than-expected earnings ($3.10 vs street $2.13) and net subscriber additions (2.41M vs street 1.09M) from Netflix, sending its shares up 12.0% in premarket trading. In other overnight earnings news Procter & Gamble was able to raise prices/shrink packaging enough to beat the street ($1.57 vs street $1.54). United Airlines is also soaring this morning, up 5.5% in premarket action with investors cheering a big earnings beat ($2.81 vs street $2.28) and strong guidance for this quarter ($2.25 vs street $0.98). Insurance giant Travelers also beat expectations ($2.20 vs street $1.54). Tesla Motors and IBM report results after the close today.

While positive earnings have helped their related individual stocks, they may be weighing on the overall market by giving traders a sense that the US economy is perhaps doing better than feared, which would potentially clear the runway for continued hawkishness at the Fed moving forward.

Bond trading suggests that investors are anticipating more tightening from central banks. The US 10-year treasury note yield has pushed up above 4.10% today, while the 30-year yield has climbed back up above 4.00% and is trading at its highest level since 2011. This has ignited another rally in the US Dollar, which is up 1.1% against Gold, 0.8% against the Euro, 0.7% against the Pound, and 0.3% against the Canadian Dollar. Commodity action is mixed with Copper down 1.1% and WTI Crude Oil up 1.0%.  

In economic news, Canadian inflation came in hotter than expected overall with headline consumer prices (6.9% vs street 6.8% and previous 7.0%), core consumer prices (6.0% vs street 5.6% and previous 5.8%) and industrial prices (0.1% vs street -2.0% and previous -1.2%) all exceeding expectations. Only raw material prices were not as bad as feared (3.2% vs street 0.0% and previous -4.2%).   US housing data was a split decision relative to expectations with housing starts missing slightly and building permits beating slightly.

Subscribe to the Morning Minutes:

Today's earnings reports and market activity, delivered right to your inbox.

Colin Cieszynski, Chief Market Strategist

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

Read More

Legal and Regulatory Disclosures

Terms and Conditions:
This information is for Investment Advisors only. The website is for informational purposes only and is not intended to provide a complete description of SIA Wealth Management’s products or services. Past performance is not indicative of future results. It should not be construed as investment advice or relied upon in making an investment decision. Products and services of SIA Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. The information contained in this Website does not constitute an offer or solicitation by anyone to buy or sell any investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot be legally made or to any person to whom it is unlawful to make an offer of solicitation. All products and services are subject to the terms of each and every applicable agreement. It is important to note that not all products, services and information are available in all jurisdictions outside Canada.

SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, Advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIA Wealth Management Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.