S&P 500 futures are slightly up this morning as investors optimistically wait for market data. Treasuries continued to erode with longer-dated yields now at or just shy of 1-year highs. The 10-year surged 9.9 bps into the close to 1.307%, while the 30-year was up over 8 bps to 2.09%. Along with a seemingly omnipresent demand for risk, rising inflation expectations continue to be a big drive in bonds, and those worries are being furthered by the likely adoption of a massive stimulus package.
There’s also a reflation trade on the prospects for a solid economic recovery. (Bear Alert)
Energy prices have been moving higher too and got an extra push from the freeze across much of the U.S. that is boosting demand while impacting output as much the electrical grid was frozen shut. Yesterday, stocks closed mixed after opening at fresh intraday peaks. Only the Dow managed to record a new high, rising 0.2% to 31,522. The NASDAQ posted a -0.34% decline, while the S&P 500 was off -0.06%
Key Market Movers:
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- U.S. calendar includes Jan retail sales, PPI, and industrial production
- Canada calendar focuses on Jan CPI – expected to jump 0.5% m/m
- Dollar firmer, tracking the recent sharp spike in U.S. Treasury yields
- UK Jan CPI rose to 0.7% y/y from 0.6% in Dec, slightly warmer than expected
- Treasuries have led to a rise in core bonds; European stocks broadly lower
There is a heavy calendar today. Headlining is the January retail sales report, expected to show a sales rebound of 0.9% after falling -0.7% in December. (A negative number will cause the markets to drop significantly.) The ex-auto component should also increase 0.9% from -1.4% previously.
January PPI is forecast edging up 0.2% for the headline versus 0.3% previously, and inch up 0.1% ex-food and energy, the same as in December. January industrial production is seen rising 0.3% versus the prior 1.6% surge in December, while capacity utilization is expected to increase to 74.8% from 74.5%.
The February NAHB housing market index is forecast at an unchanged 83. December business inventories are penciled in with a 0.5% gain, the same as in November. Weekly MBA mortgage figures and chain store sales are on tap as well. The Treasury auctions $27 bln of 20-year bonds. The minutes from the January 28-29 FOMC meeting will be released.
Fedspeak is due from Barkin and Rosengren. The earnings calendar features reports from Shopify, Baidu, Twilio, Analog Devices, Synopsys, Lloyds Banking, Nutrien, Hilton, Pioneer Natural Resources, Garmin, Entergy, DISH Network, Genuine Parts, Boston Beer, and SunPower