Futures are off moderately after weaker than expected housing data and in anticipation of next week’s Jackson Hole Fedspeak.
ES reached our next upside target a little ahead of schedule, and is now backtesting the purple TL from recent lows.
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In the Goldilocks version of the economy, the Fed is nervous enough about a recession that they cut interest rates in spite of data that isn’t so terribly concerning. That’s what we’re seeing this morning, with retail sales coming in at +1.0% versus +0.4% expected but yet another negative Phiidelphia Fed index.
The algos are quite happy, with ES popping up past our 5491.50 target and our next higher target in sight.
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CPI came in on target, supporting the notion of a September rate cut. Equities are responding as expected.
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Futures are slightly higher in a week certain to be buffeted by a bevy of important economic data.
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If you thought this past week was volatile, wait until next week’s CPI, PPI, retail sales, initial claims, housing permits and sales, and consumer sentiment.
Futures are off moderately after being up most of the night.
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Futures are up sharply in a continuation of last week’s volatility.
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Futures got a nice bounce off the 200-day moving average and are slated for another sizable bump today.
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It was only 3 weeks ago, July 16. In that day’s post [see: On the Brink] we noted that the equity meltup was at risk from the bond market.
A rather worrisome development in the bond market is threatening equities’ meltup. We’ve discussed this many, many times in the past. A breakdown in the 2s10s leads to corrections, while a breakout leads to crashes.
It’s always a bit unnerving to publicly utter the “c” word in the midst of a market meltup. At the open that day, S&P 500 was up over 19% ytd. In fact, it closed at an all-time high that day.
In hindsight, with SPX 10% now lower (Nikkei futures off 28%) and futures nailing our next downside target, it seems pretty obvious.
Don’t look now, but the bond market is on the brink yet again – an even more important brink. And, the yen carry trade is fast unwinding.
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We’re seeing spectacular moves in the bond market this morning with the 10Y, which reached our 3.99 target yesterday, plunging as low as 3.79% and the 2s10s reaching -10 bps.
Equities are taking it on the chin, with ES nearing our next downside target.
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