Strong economic data continues to worry investors, many of whom had pinned their hopes on Fed rate cuts.  Initial claims came in at 216K versus 232K expected. Personal income rose 0.3%, in line and an increase from 0.2% last month. Personal spending rose 0.5%, also in line and an increase from the prior 0.3%.

Last, headline PCE rose 0.2% MoM, as forecast, while core rose 0.3% versus 0.2% expected. The annual prints were 2.1% for PCE and 2.7% for core PCE – a data point which has the algos a little bit more nervous than they already were. It didn’t help that the employment cost index rose 0.8%.

Futures were off sharply overnight, testing the Oct 23 lows before bouncing only a bit on the economic news.

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GDP is on track with estimates at 2.8%, but ADP payroll data was 2X estimates at 233K versus 115K. Given the Fed’s recent emphasis on employment, this morning’s data adds to the argument for at least a pause in rate cuts.

The more important data, however, is tomorrow’s PCE print.

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Futures are off modestly, though SPX’s rising wedge remains intact one week ahead of the US election. Don’t look now, but the 10Y has risen to our upside target.continued for members… (more…)

It’s the final week before the critical US presidential election and there’s no shortage of important data ahead as well: consumer confidence tomorrow, GDP on Wednesday, initial claims, personal income and PCE on Thursday, and NFP and ISM manufacturing on Friday. To make things interesting, the Fed meets next week as well.

Meanwhile, ES’ backtest keeps ticking higher even as the warning signs mount.

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Futures are up moderately on another round of economic data which is good enough to suggest a soft landing but modest enough to not upset the Fed’s rate cut plans.

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Futures are umoderately higher after SPX tagged the bottom of our rising wedge pattern during yesterday’s selloff.

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Futures are again under pressure as the 10Y inches above 4% due to continuing inflation concerns.

The currency picture, however, suggests a change in the market’s fortunes.

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Futures are flirting with the 10-day moving average again this morning following yesterday’s volatile session.

As we noted yesterday, the 10Y’s recent spurt has investors concerned about the risk that additional Fed rate cuts might not be as certain as bulls would like to believe.

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Starts and permits came in roughly in line with expectations, satisfying both the Fed watchers and the futures, which barely reacted.

Construction fell just enough that it won’t interrupt the Fed’s inflation fighting efforts, but not so much that the soft landing folks are alarmed.

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