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Briefing.com Summary:
*Oil prices are up, but Treasury yields are down.
*The Japanese yen is rallying today, stoking speculation of currency intervention.
*Fed Governor Waller (FOMC voter) tempers some rate-hike worries.
Market signals are getting crossed this morning, but that hasn't caused too much disruption in front of the opening bell.
The signals of note include higher oil prices but lower bond yields. We're not seeing the connection, as higher oil prices have typically been a conduit for higher bond yields. Accordingly, the move in the Treasury market looks more technical in nature than fundamental.
Elsewhere, the Japanese yen is remarkably strong at 155.73, while the U.S. dollar is particularly weak, evidenced by a 0.5% decline in the U.S. Dollar Index. That mix is stoking speculation of a currency intervention effort.
The 10-yr note yield continues to hold below 4.80% (currently 4.74%); meanwhile, WTI crude futures are up 1.2% to $92.07/bbl, and Brent crude futures are up 0.7% to $96.30/bbl.
Currently, the S&P 500 futures are up 22 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 45 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 304 points and are trading 0.6% above fair value.
Fed Governor Waller (FOMC voter) is jumping into the fray with some mixed comments about the future policy path. He said that inflation is meaningfully above the Fed's 2.00% target and implied that if progress toward 2.00% isn't seen in the August data, he could be inclined to vote for a rate hike. However, the view that seems to be winning out in the market is his take that recent data has shown some signs of disinflation, and if that continues, he would be inclined to keep the policy rate on hold at the September FOMC meeting.
The 2-yr note yield is down seven basis points to 4.32%, and the equity futures market extended its gains in the wake of his remarks and a batch of economic data that skewed toward being market friendly.
- The trade deficit widened to $88.6 billion in July (Briefing.com consensus: -$89.6 billion) from an upwardly revised -$71.2 billion (from -$73.3 billion) in June, as imports were $10.8 billion more than June imports and exports were $6.6 billion less than June exports.
- The key takeaway from the report is that the widening deficit will be a drag on Q3 GDP growth estimates.
- Q2 productivity was 1.4%, unchanged from the advance estimate and as expected. Unit labor costs, though, were revised down to 1.2% (Briefing.com consensus: 1.3%) from 1.3% in the advance estimate.
- The key takeaway from the report is that the downtick in unit labor costs from the advance estimate helped keep inflation concerns in check.
- Initial jobless claims for the week ending August 29 increased by 2,000 to 206,000 (Briefing.com consensus: 205,000). Continuing jobless claims for the week ending August 22 increased by 8,000 to 1.779 million.
- The key takeaway from the report is that the low level of initial jobless claims continues to connote a low-firing environment.
The pleasing economic data has been mixed in with some mixed responses to earnings results. To that end, Snowflake (SNOW), up 23%, Five Below (FIVE), up 6%, and Ciena (CIEN), up 3%, are among the notable gainers, whereas NetApp (NTAP), down 11%, Victoria's Secret (VSXY), down 10%, Hewlett-Packard Enterprise (HPE), down 5%, and Broadcom (AVGO), down 3%, are among the notable laggards before the opening bell.
In other news, NVIDIA (NVDA) announced that it will be acquiring Hugging Face for $12.9 billion, which includes a $1.0 billion equity-based retention program.
