It was a ho hum sort of day, with limited eco data and no major earnings to report. China stole most headlines this morning as they continue to wade deeper into disinflation. China’s CPI and PPI decreased 0.3% and 4.4%, respectively, in July but limited reaction from markets make it seem like these moves are already priced in. Despite concerns over China’s economy, oil markets continue to push higher. WTI crude has made another 9m high and closed above $84 for the first time since November. EIA…

Markets fell sharply to start the session after Fitch downgraded the US from AAA to AA+, citing the “deterioration in standards of governance” and failure to find a timely resolution to previous debt ceiling negotiations as the main reasons. Despite the shock caused by this downgrade, don’t expect the fallout to be like the one twelve years ago when S&P downgraded to AA+ following a similar debt ceiling standoff. Back in 2011, US indexes fell nearly 7% in one day, but the country was in a diffe…

That was one busy week, between endless earnings, the FOMC meetings, and multiple economic data points, traders had plenty of information to digest. Today was no different, we kicked off this morning with the Fed’s preferred inflation gauge PCE. Core PCE for June fell to 4.1% (cons. 4.2%), finally breaking away from the 4.6% it has been stuck at since December. Headline PCE fell to a 3.0% y/y (same rate as CPI), bringing it to the lowest level in over 2 years. Additionally, US Employment Cost I…

Well, there you have it folks! 25bps as predicted by pretty much everyone. The Fed’s unanimous decision brings interest rates to the highest level in 22 years. After the announcement, traders waited patiently for JP to take the podium with the hopes of him hinting at another pause considering the recent soft inflation data. Instead, and as with previous press conferences, JP left the door open for more hikes this year. He notes the softening inflation data as a positive but also shines light on…

Earnings seasons is now in full swing as another round of bank earnings were released this morning. A continuance from last week’s batch of earnings, Bank of America, Morgan Stanley, Bank of New York Mellon, and Charles Schwab posted beats driving up the KBW Index (BKX +3.03%) to levels not seen since April. The regional bank index (KRX +4.1%) also gained during the session to a three-month high thanks to push from PacWest (PACW +8.5%) who reports next Tuesday. Bank concerns appear to be fading…

A hesitant start to the week with main US indexes trading sideways for most of the session as traders prepare for CPI data on Wednesday and the start of another earnings season Friday. Markets were graced with a lineup of Fed speakers prior to the lunch hour with Barr, Daly and Mester expressing support for more rate hikes while Bostic was more dovish and supports a more patient approach. Some encouraging news in the fight against inflation today, Manheim Auctions reported a 4.2 percent decreas…

A welcomed miss from nonfarm payrolls (209k vse 230k) this morning sent treasury rates lower and indexes higher for a brief few minutes before traders realized this miss (which was still an increase in jobs) will not be enough to knock Powell off his plan for two more rate hikes this year. CME data is showing 92 percent chance of a hike at the next meeting but some uncertainty if another will follow into year end. The unemployment rate dropped to 3.6 percent while average hourly earnings YoY (+…

A day after Jerome Powell warned markets that more restrictions were necessary to cool inflation, traders were surprised after initial jobless claims (act. 239k est. 265k) and continuing claims (act. 1742k est. 1765k) came in lower than expected. On top of the low claims, Q1 GDP posted stronger than expected growth of 2 percent. Yields shot higher and treasuries sold off as the “higher for longer” rhetoric finally takes hold for traders. The US2Y (USGG2YR 4.861%) is at its highest point since M…

After the S&P snapped a five-week winning streak on Friday, indexes continued with the same theme today. Momentum seems to have stalled for the major US indexes as of late with investors becoming skeptical of big tech valuations. Breadth was very positive today for the S&P with 70% of stocks up on the day but it was not enough to overcome the negative pressure from big tech. The NYFANG index closed 3% lower, now down 5.2% since the start of last week. While the NYFANG index has seen a pullback…

All those who were expecting a rate cut during 2023 can take a HIKE! After the Fed surprised no one by holding rates at their current levels, the median rate is now forecasted to be 5.6% at end of 2023 and 4.6% at end of 2024. Today’s can only be seen as a very hawkish “pause” and will give the Fed more time to assess the 15 months of rate hikes. The FOMC raised its forecast for 2023 core inflation. It is now expecting an upper bound PCE of 4.5% compared to the previous 4.1% helping to support…