Stock Market Update

The stock market is on track for a firmly higher start with futures on the S&P 500 trading 45 points above fair value.

Equity futures reflect some overall optimism about the ceasefire agreement between Israel and Iran, though both sides appear to have violated the ceasefire already. Capital markets, however, do not seem worried that this will lead to an escalation in the conflict.

Crude oil futures have seen additional weakness this morning, falling toward $66/bbl.

Treasuries are little changed with the 10-yr yield up two basis points at 4.34% while the 2-yr yield is up one basis point at 3.84% ahead of today's $69 bln 2-yr note sale.

Today's economic data will include the 8:30 ET release of Q1 Current Account Balance (prior -$303.9 bln), followed by the FHFA Housing Price Index (Briefing.com consensus 0.0%; prior -0.1%) and April S&P Case-Shiler Home Price Index (Briefing.com consensus 4.1%; prior 4.1%) at 9:00 ET, and June Consumer Confidence (Briefing.com consensus 99.0; prior 98.0) at 10:00 ET.

In U.S. corporate news:

• Chewy (CHWY 42.80, -0.56, -1.3%): priced an offering by selling shareholder and concurrent repurchase.
• KB Home (KBH 52.73, -0.59, -1.1%): beat Q2 expectations and lowered its FY25 housing revenue, average selling price, and profit margin guidance.
• Mastercard (MA 555.25, +12.90, +2.4%): agreed to deepen its partnership with Fiserv (FI 177.70, +7.16, +4.2%).
• Starbucks (SBUX 93.11, +0.77, +0.8%): refuted a report that it is looking to sell its China business.

Reviewing overnight developments:

• Asian markets ended higher. Japan's Nikkei +1.1%, Hong Kong's Hang Seng +2.1%, China's Shanghai Composite +1.2%
  • In economic data:
    • Japan's April BoJ Core CPI 2.5% yr/yr, as expected (last 2.4%)
    • South Korea's June Consumer Confidence 108.7 (last 101.8)
    • New Zealand's May Credit Card Spending 2.2% yr/yr (last 0.5%)
  • In news:
    • Japan's Prime Minister Ishiba touted a plan to boost the country's GDP growth ahead of next month's Upper House elections.
    • Japan's Ministry of Finance sold 20-yr bonds to decent demand.
• Major European indices trade in the green. Germany's DAX +1.9%, U.K.'s FTSE +0.3%, France's CAC +1.3%
  • In economic data:
    • Germany's June ifo Business Climate Index 88.4 (expected 88.1; last 87.5). June Current Assessment 86.2 (expected 86.5; last 86.1) and Business Expectations 90.7 (expected 90.0; last 89.0)
    • U.K.'s June CBI Industrial Trends Orders -33 (expected -28; last -30)
  • In news:
    • European Central Bank policymaker Villeroy de Galhau said that the ECB may still cut rates over the next six months despite a volatile price of oil.
    • Germany's debt issuance in Q3 will be about EUR19 bln more than originally planned.