There is a rebound effort on the way. The S&P futures are up 20 points and are trading 0.9% above fair value. The Nasdaq 100 futures are up 60 points and are trading 1.0% above fair value. The Dow Jones Industrial Average futures are up 180 points and are trading 0.9% above fair value.
The market is reportedly in a better mood, because it is less depressed about the trade issues. The basis for that claim stems from a Washington Post article that indicates GOP lawmakers are discussing the possibility of holding a vote that could potentially block President Trump's tariff plan for Mexico; and there was a declaration from China's Ministry of Commerce that it hopes the U.S. can meet half way in trade negotiations.
Those reports might be helping some, although we should add in the case of the China headline that the Ministry of Commerce also said it hopes the U.S. will stop its "wrong doings." On a related note, the USTR and Dept. of Treasury issued a joint statement yesterday, rebuking China for the publication of its misleading White Paper on the history of the trade negotiations and for playing a "blame game."
In brief, there isn't as much -- or much at all really -- to the idea that the U.S. and China are in a better place to resolve their differences soon than they were yesterday.
The more practical basis for the positive bias in the futures market is the understanding that the broader market held up quite well yesterday despite the trade issues and the bloodletting in Alphabet (GOOG), Facebook (FB), Amazon.com (AMZN), and Apple (AAPL) on regulatory concerns.
That resilience has contributed to the belief that the market is primed to rebound from a short-term oversold condition. The recognition that the Treasury market is getting hit this morning with selling interest has furthered that view, especially since the Treasury market isn't getting any benefit, like it has in past sessions, from weak data out of Europe.
The May CPI report for the eurozone showed a deceleration in the yr/yr rate in total CPI to 1.2% from 1.7% in April and in core CPI to 0.8% from 1.3% in April. The German bund yield is down two basis points to -0.21%, yet the relative value trade that has bolstered the Treasury market isn't in play at the moment.
The 2-yr note yield is up seven basis points to 1.90% and the 10-yr note yield is up four basis points to 2.12%.
The absence of a flight to safety in Treasuries, then, has lightened the mood somewhat in the stock market, providing some runway to drive a rebound effort at the opening bell. It hasn't hurt matters either that Chicago Fed President Evans (FOMC voter) said in a CNBC interview this morning that he thinks a "light tilt" to accommodation would be okay. Importantly, Mr. Evans didn't say when and reiterated that the Fed is going to be data dependent.
Anyhow, it's the type of comment that works on a day like today, which also happens to be a good day for a host of firms to come out and initiate coverage of Uber (UBER) with a "Buy" rating or the equivalent thereof. Shares of UBER are up 2.9% in pre-market trading.
The trading vibe is upbeat for now, which should translate into a broad-based rebound effort when the opening bell rings.