Page One
Briefing.com Summary:
*There is some angst about the sustainability of the U.S.-Iran ceasefire agreement.
*Oil prices are up again, as passage through the Strait of Hormuz reportedly remains largely at a standstill.
*PCE inflation and core-PCE inflation remained stubbornly elevated in February (i.e., before the start of the Iran war).
Yesterday was the equivalent of a big exhale in the stock market, as the worst-case scenario in the Iran war did not come to fruition. Unfortunately, the Iran war has also not come to an end, not officially, anyway. There is a tentative ceasefire agreement with a two-week shelf life, and there has been some disconcerting chatter that the agreement has already been violated.
That position revolves around Israel's continued strikes against Hezbollah in Lebanon and reports that the Strait of Hormuz has still not been opened completely for safe passage. So, there is finger-pointing on all sides, which is certainly better than missiles and drones flying on all sides.
Nonetheless, there is a cloud of angst about the sustainability of the ceasefire that is hanging over the market. It's like the equivalent of a dark cloud in the air, with a few spots of blue sky around it. You're not sure if the cloud will open up and drop rain to ruin your day or if the blue sky patches will open up and push that dark cloud away.
The result is a market that went from exhaling to holding its breath to see what comes next. That anxiety is popping up in oil prices, which are higher. WTI crude futures are up 5.6% to $99.66/bbl, while Brent crude futures are up 3.8% to $98.38/bbl.
In turn, the S&P 500 futures are down 19 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 48 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 176 points and are trading 0.3% below fair value.
That is a minor pullback relative to yesterday's gains, but there is some hesitation on the part of buyers waiting to see if the stock market can muster a follow-through move. Oil prices and Treasury yields will play a large part in determining that outcome.
It's worth noting that Treasury yields were little changed yesterday in spite of the relief rally that transpired in the stock market. We're not entirely sure what to make of that, but deficit concerns (it isn't cheap to have a war) have been touted as a possible factor.
There has been some seesaw action in the Treasury market this morning following a batch of data released at 8:30 a.m. ET.
- Initial jobless claims for the week ending April 4 increased by 16,000 to 219,000 (Briefing.com consensus: 215,000). Continuing jobless claims for the week ending March 28 decreased by 38,000 to 1.794 million.
- The key takeaway from the report is that continuing claims hit their lowest level since May 11, 2024.
- The third estimate for Q4 GDP checked in at 0.5% (Briefing.com consensus: 0.7%) versus the second estimate of 0.7%. The revision primarily reflected a downward revision to investment. The GDP Deflator was 3.7% (Briefing.com consensus: 3.8%) versus the second estimate of 3.8%.
- The key takeaway from the report is that it suggests the economy closed last year on a sluggish note; however, it wasn't quite as soft as it appears when taking into account that real final sales to private domestic purchasers were up 1.8%.
- Personal income decreased 0.1% month-over-month in February (Briefing.com consensus: 0.5%) following a 0.4% increase in January. Personal spending rose 0.5% (Briefing.com consensus: 0.6%) following a downwardly revised 0.3% (from 0.4%) in January. The PCE Price Index jumped 0.4% (Briefing.com consensus: 0.4%) after rising 0.3% in January and was up 2.8% year-over-year, unchanged from January. The core PCE Price Index also rose 0.4% (Briefing.com consensus: 0.3%) on the heels of a 0.4% increase in January and was up 3.0% year-over-year versus 3.1% in January.
- The key takeaway from the report is that it reflects sticky inflation pressure before the Iran war started, so it won't sway the Fed from sticking with a wait-and-see policy stance.
