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Briefing.com Summary:
*Markets face "analysis paralysis" from a packed day of events.
*FOMC expected to hold rates; focus is on potential dissents and Powell’s comments.
*Q2 GDP and July ADP Employment Change reports print upside surprises.
Today is one of those all-inclusive days. There is earnings news, economic data, an FOMC policy decision, trade talk, a quarterly refunding announcement, and even a tsunami warning for Hawaii and the California coast following an 8.8 magnitude earthquake in Russia.
Market participants will be forgiven if they don't rush to act on any of it, mainly because there is so much to which they can react. It is a day where "analysis paralysis" could set in, given the permutations of what it could mean for the market outlook. For good measure, the earnings reports from Microsoft (MSFT) and Meta Platforms (META) await after the close.
Currently, the S&P 500 futures are up six points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 52 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 12 points and are trading 0.1% above fair value.
There isn't a lot of pep in that step, but to be fair, the market hasn't really been tripped up by any of the news items either.
Most companies reporting earnings have exceeded expectations (see Briefing.com's Earnings Results Calendar for the full rundown), President Trump has confirmed that there won't be an extension of the August 1 tariff deadline, there still hasn't been a formal extension of the August 12 tariff deadline for China, and the Treasury Department has announced that it is offering $125 billion of Treasury securities to refund approximately $89.8 billion of privately-held Treasury notes and bonds maturing on August 15, 2025. Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.
The securities are:
- A 3-year note in the amount of $58 billion, maturing August 15, 2028;
- A 10-year note in the amount of $42 billion, maturing August 15, 2035; and
- A 30-year bond in the amount of $25 billion, maturing August 15, 2055.
In terms of today's economic data, it carried relatively good news.
- The ADP Employment Change Report for July showed private sector employment increasing by 104,000 (Briefing.com consensus: 78,000) following an upwardly revised decline of 23,000 (from -33,000) in June.
- The key takeaway is that, while the overall employment growth was modest, it was broad-based with gains for small, medium, and large establishments. In brief, it was not a report that signals any material weakness in the labor market.
- The Advance Q2 GDP report showed real GDP increasing at an annual rate of 3.0% (Briefing.com consensus: 2.5%) following a 0.5% decline for the first quarter. The GDP Deflator increased 2.0% (Briefing.com consensus: 2.6%) following a 3.8% increase in the first quarter.
- The key takeaway from the report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%), which are a subtraction in the calculation of GDP. The net exports component contributed 4.99 percentage points to Q2 GDP growth.
The FOMC decision will be released at 2:00 p.m. ET, but it is effectively already known. The fed funds futures market is assigning a 97.9% probability to the FOMC leaving the target range for the fed funds rate unchanged at 4.25-4.50%. The intrigue revolves around how many members will cast a dissenting vote, preferring a lower rate, and what Fed Chair Powell communicates at his press conference, which begins at 2:30 p.m. ET.
The 2-yr note yield is up three basis points to 3.90%, and the 10-yr note yield is up four basis points to 4.36%.
