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Briefing.com Summary:
*Renewed pressure on sentiment after President Trump's address was less conciliatory than expected.
*Added caution ahead of holiday weekend.
*March Employment Situation report to be released on Good Friday.
The stock market started April in optimistic fashion thanks to growing hopes for a near-term conclusion to the Iran conflict. However, that optimism is being questioned today after President Trump's Wednesday night address to the Nation seemed more focused on additional strike plans rather than deescalation. The S&P 500 futures trade 100 points below fair value, putting the cash market on course to give back its gain from yesterday.
President Trump said that additional strikes are being planned for the next couple weeks if there is no deal, adding that countries which receive cargo shipped through the Strait of Hormuz should make an effort to keep the route safe. He also explained his reasoning for the campaign, highlighted progress, and noted that the length of the ongoing conflict pales in comparison to past wars that the U.S. had been entangled in.
Oil prices have rallied back toward $110/bbl in response, with WTI crude rising above Brent crude. Meanwhile, global equity and bond markets have retreated, giving back some of their recent gains. There is also some caution being added to the mix ahead of the Easter weekend, which will keep all major European markets and a handful of Asian bourses closed from tomorrow through Monday.
Treasuries started the day with modest losses (10-yr yield +4 bps to 4.36%) and they have held near their starting levels after today's economic data, which included another solid initial claims reading and a widening in the trade deficit for February.
Initial jobless claims for the week ending March 28 fell by 9,000 to 202,000 (Briefing.com consensus 215,000) from last week's revised reading of 211,000 (from 210,000). Continuing claims increased by 25,000 to 1.841 million from last week's revised reading of 1.816 million (from 1.819 million).
The key takeaway from the report is that initial claims remain near the 200,000 mark, reflecting a low-firing environment.
The trade deficit widened to $57.3 billion in February (Briefing.com consensus -$55.8 billion) from a revised $54.7 billion deficit (from -$54.5 billion) in January. The wider gap was the result of exports being $12.6 billion more than January exports and imports being $15.2 billion more than January imports.
The key takeaway from the report is that February imports grew more than exports even though February nonfuel import prices (+1.1%) increased at a slower pace than non-agricultural export prices (+1.7%).
Equity futures have not shown much reaction to the data, which has been the case since the start of the Iran conflict. Tomorrow, the market will receive March Nonfarm Payrolls (Briefing.com consensus 51,000; prior -92,000) and Nonfarm Private Payrolls (Briefing.com consensus 51,000; prior -86,000) at 8:30 ET, but investors will have to wait until Monday to see the stock market's reaction to the report since the New York Stock Exchange will be closed for Good Friday.
