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Friday's trade had a risk-off disposition that was precipitated by the news that Israel had launched airstrikes on Iran's nuclear facilities. Those strikes triggered retaliatory strikes by Iran on Israel over the weekend, yet the equity futures market is trading higher this morning.
Currently, the S&P 500 futures are up 39 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 175 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 263 points and are trading 0.6% above fair value.
The better turn of events today has been sparked by a measure of relief that (a) this conflict remains relatively contained and (b) that there haven't been any major disruptions to oil supply lines.
Crude futures spiked on Friday on supply disruption fears, but they are backing down today. WTI crude futures are down 1.1% to $72.12/bbl, while Brent crude futures are down 1.1% to $73.43/bbl.
There is also some natural buy-the-dip interest that has worked its way into the early tape, which has been helped by China reporting stronger-than-expected retail sales for May. Specifically, retail sales increased 6.4% year-over-year (4.9% expected), helping to temper some of the global growth concerns.
The U.S. Retail Sales Report for May will be released before tomorrow's open. The lone release on today's calendar was the Empire State Manufacturing Survey for June, and it was weaker than expected at -16.0 (Briefing.com consensus -6.6; prior -9.2), with the indexes for new orders and shipments both declining.
This was the fourth consecutive decline in manufacturing activity in New York State; however, firms turned positive about conditions for the next six months.
The Treasury market had a muted reaction to the report. The 2-yr note yield is up one basis point to 3.97%, and the 10-yr note yield is up two basis points to 4.44%. There will be a $13 billion 20-yr bond auction today, with results at 1:00 p.m. ET.
Market participants are waiting anxiously for a number of central bank decisions this week, including the Bank of Japan decision tonight and the FOMC decision on Wednesday, which will feature an updated Summary of Economic Projections.
There isn't any corporate news of note this morning to move the market, which remains fixated on the intertwined macro and geopolitical scenes. On a related note, the G7 meeting is taking place in Alberta, Canada.
