The USD is the strongest and the CAD is the weakest as the North American session begins. With CPI in the rear view mirror (worse than expected and new 4 decade high), the producer price index is to be released in the US this morning (est. 0.8%). After the CPI, the expectations for 75 basis points are a certainty, while chances for 100 basis points at the July 27th meeting started to get some decent traction. Fed's Bostic said that it is not off the table at least for him.
US stocks moved lower yesterday, but did rebound off the lows. The major indices are moving lower today with the Dow futures implying a -400+ point move lower and the broader S&P down around -50 points in premarket trading. The S&P and Dow are working on the 5th consecutive day to the downside. JPM and Morgan Stanley earnings this morning missed adding some fuel to the fire.
European shares are lower as well with the German Dax over 1%.
Crude oil is down around -$2.00 and is banging on the 200 day MA and also looking toward the low from April 11 at $92.93 (the low reached $93.24 today so far).
Yields are mixed with the shorter end higher while the longer end is lower as the yield inversion increases on recession fears eventually in the US is the Fed is forced to tighten more than expectations.
A snapshot of the markets currently shows:
- spot gold is down $-22.00 or -1.25% at $1712.70
- spot silver is down $0.50 or -2.66% at $18.65
- crude oil is trading at $93.97. That's down $2.25.
- Bitcoin is trading at $19,700
In the premarket for US stocks, the futures are implying a sharp move to the downside as the earnings season gets firmly underway with J.P. Morgan and Morgan Stanley reporting premarket and disappointing:
- Dow industrial average -463 points after yesterdays -208.54 point decline
- S&P index -56 points after yesterdays -17.0 point decline
- NASDAQ index -124 points after yesterdays -17.15 point decline
The Dow industrial average and S&P index is down for 4 consecutive days and working on the 5th today.
In the European equity markets, the major indices are also moving lower:
- German DAX, -164 points or -1.28%
- France's CAC -73.22 points or -1.22%
- UK's FTSE 100 -72 points or -1.01%
- Spain's Ibex -142 points or -1.79%
- Italy's FTSE MIB, -562 points or -2.64%. There political problems in Italy is PM Draghi threatened to quit if the 5-Stars Movement abandons his coalition government. Yields are higher as well in the Italy
In the US debt market, yields are higher in the shorter end well lower at the curve as the yield curve continues to move into negative territory. The 2 – 10 year spread is currently at -26 basis points.
- 2 year 3.203%, +4.2 basis points
- 5 year 3.198%, +4.1 basis point
- 10 year 2.935%, unchanged
- 30 year 3.097%, -2.4 basis points
In the European debt market, the yields are sharply higher in Italy with a 16.6% increase as political pressures send investors fleeing. The widening of the spread throws a monkey wrench into the fragmentation issues within the European Union:
