Morning Minutes

US Stocks Soar as Inflation Softens




US index futures have exploded to the upside in the initial minutes following a better than expected US consumer inflation report. Headline CPI declined more than expected (8.5% vs street 8.7% and previous 9.1%), while core CPI, excluding food and energy prices, held steady rather than increasing (5.9% vs street 6.1% and previous 5.9%). After spending the morning sitting quietly, Dow futures are now up 1.1% and NASDAQ futures are up 2.1%.

Bond prices are also rallying on the news. The US 10-year treasury note yield has slipped back under 2.70%, while the 30-year treasury note yield has slipped slightly under 3.00%. The US Dollar is selling off on the news as well, falling 1.0% against the Euro, 1.1% against the Pound, 0.5% against Gold and 0.3% against the Loonie.  Commodity action is mixed. WTI crude oil is down 1.3% and has slipped back under $90.00/bbl, while natural gas is down 1.1%. Copper is up 0.8% while platinum is up 0.6%  

Tomorrow US producer price inflation is due with analysts expecting to see some declines from last month. Weekly US unemployment numbers are also due with the street expecting initial claims to continue their steady march upward.

Better than expected consumer (2.7% vs street 2.9%) and producer (4.2% vs street 8.0%) price inflation numbers didn’t help Asia Pacific markets overnight as the Hang Seng dropped 2.0% and the Nikkei fell 0.7%, while Shanghai and Sydney both slid 0.5%. European markets are flat this morning after Germany and Italy reported in line consumer price inflation numbers of 7.5% and 8.4% respectively.

In earnings news, cryptocurrency exchange Coinbase is down 5.1% in premarket trading after reporting larger than expected losses per share ($4.98 vs street $2.65) on smaller than expected revenues ($808M vs street $832M).  A few big cap companies are scheduled to report earnings later today, including: Walt Disney in the US plus Manulife Financial in Canada.   

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Colin Cieszynski, Chief Market Strategist

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

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