Morning Minutes

US Stocks Try To Stabilize Ahead of Tomorrow’s Big Economic Numbers

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The Morning Minutes will not be issued tomorrow or Friday, they will return on Monday July 4th.

Yesterday’s US selloff which saw the Dow lose 1.5%, the S&P slide 2.0% and the NASDAQ plunge 3.0% continued through overseas markets overnight and into this morning. The Hang Seng lost 1.8%, while in Europe, the Dax is down 1.1%. In another sign of investor caution, cryptocurrencies are down again with Bitcoin falling 1.1% and Ethereum dropping 3.9%, while gold is up 0.4%.

As the morning has progressed, bulls have started to mount a defense and some markets have started to stabilize with US Index Futures plus the FTSE flat to up 0.2%. Commodities are also picking up again with WTI Crude Oil up 1.5%, Natural Gas up 2.0% and Copper up 0.6%.

Today’s economic numbers have been mixed. The second update of the Q1 GDP report saw the headline number revised downward (-1.6% vs previous -1.5%), while the inflation component was revised upward (8.3% vs previous 8.1%). Germany reported a slight improvement in their consumer price inflation report (7.6% vs street 8.0% and previous 7.9%).

Yesterday, Cleveland Fed President Mester suggested she could potentially see another 0.75% hike at the next Fed meeting, and Fed Chair Powell speaks today. The rest of this week, which coincides with the end of the month and the quarter, brings a number of economic reports that could influence sentiment. Tonight brings monthly Manufacturing and Service PMI reports for China, followed by Chicago PMI on Thursday and Manufacturing PMI for most of the world on Friday. Investors may look to the headline numbers for signs of a recession, and also at the inflation components for whether pressure on central banks to tighten is increasing, stabilizing or decreasing. Speaking of inflation, the Fed’s preferred measure, monthly PCE inflation, is due on Thursday, Friday also brings US construction spending, but nonfarm payrolls don’t come out until July 8th.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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