The stock market had a down week last week and things this week aren't slated to start on an upbeat note. The S&P futures are down seven points, which leaves them trading slightly below fair value. The Nasdaq 100 futures are down 26 points and the Dow Jones Industrial Average futures are down 107 points, which also leaves them trading modestly below fair value.
The Treasury market isn't to blame -- not directly anyway. The Treasury market is closed today in observance of Columbus Day.
Rising interest rates, however, are still very much part of the market narrative. Specifically, there is some nervous chatter about how quickly rates moved last week and how they might be entering a new domain that could create a real headwind for this bull market.
That consideration has kept the buy-the-dip crowd at bay for the time being, as has some nervous disruption in foreign markets.
China's Shanghai Composite opened again today after being closed all of last week for the Golden Week holidays. Not surprisingly, it did not re-open well. The Shanghai Composite dropped 3.7%, which was even more remarkable given that the People's Bank of China also announced a 100 basis points reduction in the required reserve ratio, effective October 15.
Trade tension is building for Chinese investors and for Chinese businesses. It is also increasing between U.S. and Chinese government officials.
Press reports today indicate Chinese Foreign Minister Wang Yi criticized the U.S.'s handling of matters in public in front of Secretary of State Pompeo who had arrived in Beijing to brief China on nuclear developments with North Korea among other things. Mr. Pompeo simply asserted that the U.S. and China have a fundamental disagreement on matters.
That exchange underscored for market participants that the trade stand-off with China could be standing for quite some time.
In any event, it is a headline development that has contributed to the lack of buying interest in the early going. Another item weighing on sentiment is Italy's budget planning and Italian leaders' seemingly recalcitrant stance in the face of concerns expressed about the plan by EU officials.
That stand-off, if one wants to call it such, has pressured European markets today and particularly European banks. Germany's DAX Index is down 0.9% while Italy's FTSE MIB is down 2.4%. The Italian 10-yr note yield, meanwhile, has spiked 19 basis points to 3.60%.
There won't be any economic data of note out of the U.S. today and the corporate news is somewhat limited.
A few items commanding added attention are the Barclays upgrade of General Electric (GE) to Overweight from Neutral and the announced merger of oil drillers Rowan Cos. (RDC) and Ensco (ESV).
The latter deal would typically give a boost to the energy sector, but it remains to be seen if that will be the case today considering oil prices ($73.25, -$1.09, -1.5%) are falling today amid reports the Trump Administration might be entertaining the possibility of granting some waivers on Iranian oil import sanctions.
Market participants will be keeping a close watch on oil prices, but they will be really intent to see how the stock market in general trades today after last week's discombobulation.