The futures market is playing a game of "follow the bouncing headline." Earlier this morning, the futures indication was pointing to a slightly lower start, but now the indication is pointing to a comfortably higher start.
What turned things around? A tweet from the president, who clarified that he never said when an attack on Syria would take place and that one "...could be very soon or not so soon at all!"
Strikingly, the tweet doesn't say that there won't be an attack and still allows that one could happen soon, so it's a little unclear why the response to it would be so positive. Thin trading conditions and algorithms with a superficial headline mindset might have something to do with it, yet that's just speculation.
In any event, the indication is what the indication is, and the cash market is now on course for a positive start.
The S&P futures, which were down a few points prior to the tweet, are up 14 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 39 points and the Dow Jones Industrial Average futures are up 146 points.
Better than expected earnings results from Delta Air Lines (DAL) and BlackRock (BLK) are lending some added support, as they have given the market a taste of what should be a very good first quarter earnings reporting period.
The question is, can the good earnings news overshadow inflammatory headlines on the geopolitical front (should they occur) or will the inflammatory geopolitical headlines serve as a buzz kill on the earnings-reporting party?
Time will soon tell, but one scenario the market won't want to see play out is a lackluster response to good earnings news without any upsetting geopolitical headlines to blame. That disposition would expose underlying concerns about the longevity of this bull market.
We'll cross that bridge if/when we get to it, but for now, there has been a bullish crossover from yesterday's bearish behavior despite separate reports out of China that President Xi's speech the other day was not a concession speech to President Trump's trade interests.
Recall that the market rallied nicely on the idea that President Xi struck a conciliatory tone in his remarks on trade measures and opening up China's markets.
This morning's economic data has been taken in stride.
Initial claims for the week ending April 7 decreased by 9,000 to 233,000 (Briefing.com consensus 230,000) while continuing claims for the week ending March 31 jumped by 53,000 to 1.871 million. There was nothing jarring in this data, which is consistent with the favorable jobless claims trends seen for some time.
Separately, the Import and Export Price Index for March also showed some consistency in the view that inflation trends are firming.
Import prices were unchanged in March, but excluding fuel, they were up 0.2%. Export prices were up 0.3%, but excluding agricultural products, they were down 0.1%.
The overall month-over-month changes are on the softer side, yet the year-over-year changes in core prices are where the firming inflation story lays.
To the latter end, nonfuel import prices are up 2.1% year-over-year, which matched February for the largest year-over-year increase since February 2012. Nonagricultural export prices are up 3.4% year-over-year, versus 3.2% for the 12-month period ending in March 2017.
The Treasury market hasn't shown much reaction to the data, although it, too, reacted to the president's tweet and started backing up when the index futures started moving up.
After flirting with 2.77% overnight, the yield on the 10-yr note is up one basis point to 2.80%.