US index futures are holding steady digesting yesterday’s declines. Stronger economic data from the US lately and hawkish FOMC member comments have increased speculation that the Fed could be preparing to raise interest rates as soon as June and that 2-3 hikes are still possible this year. This morning Lowes posted strong results echoing those of Home Depot yesterday, confirms the big increase in April retail sales reported last Friday.
Traders are now waiting for this afternoon’s FOMC minutes to see if another shoe will drop. Minutes from the March meeting indicated Fed members discussed what they may do in April, so traders may look at the April minutes to see if the Fed discussed taking any actions in June or July.
The prospect of a June rate hike has weighed more on stocks and bonds this week, markets where participants were expecting rate hikes to be pushed off to late 2016 or even next year despite warnings from Fed members that they were being too pessimistic. USD is up slightly today but essentially continues to hang around 95.00 on the US Dollar index where expectations of two 2016 rate hikes have been priced in by currency traders.
European markets are mixed today. Italy and Spain are trading up slightly on indications that EU may give them some flexibility on budget and debt requirements, while the UK and Germany are down marginally. An Ipsos Brexit poll came out this morning showing Remain leading 55%-37%. This poll has sparked a pop in GBP but no significant action in the FTSE
. The Ipsos result looks like an outlier way out of line relative to several other published polls and the timing appears dodgy coming so quickly after yesterday’s TNS poll showed the Leave camp taking the lead for the first time in months from that agency. The Sterling rally has already started to level off and today’s poll could be discounted as spurious by the markets over the course of the day.
Crude oil is trading slightly lower this morning but still well above where it started the week and with Brent within striking distance of $50.00. API inventories fell less than expected but fell all the same. We could see more action in oil though the day especially around the DOE inventory reports due mid-morning or any supply news related to the wildfires in Canada or terrorism in Nigeria.
Lowes $0.98 vs street $0.85, sales $15.2B vs street $14.8B, same store sales 7.3% wow vs street 4.7%, raises full year guidance to $4.11 from $4.00
Staples $0.17 vs street $0.16
Significant announcements released overnight include:
US API crude oil inventories (1.1 mmbls) vs street (2.9 mmbbbls)
Kentucky primary results 50-50, Clinton marginally ahead
Oregon primary results Sanders wins 53%-47%
Japan GDP annualized update 1.7% vs street 0.3% vs previous (1.1%)
Japan GDP over quarter 0.5% vs street 0.3%
Japan GDP private consumption 0.5% vs street 0.2% vs previous (0.9%)
Japan GDP business spending (1.4%) vs street (0.8%) vs previous 1.5%
UK jobless claims (2k) vs street 5K
UK 3M employment change 44K vs street 0K vs previous 20K
UK average weekly earnings 2.0% vs street 1.7%
UK unemployment rate 5.1% as expected
Eurozone consumer prices (0.2%) as expected
Eurozone core CPI 0.7% as expected
Australia wage price index 2.1% vs street 2.2%
NZ producer input prices (1.0%) vs previous (1.2%)
NZ production output prices (0.2%) vs previous (0.8%)
Announcements due later today include:
10:30 am EDT US DOE crude oil inventories street (3.2 mmbbls)
10:30 am EDT US DPS gasoline inventories street (1.0 mmbbls)
2:00 pm EDT US FOMC minutes