Daily Market Color

US Markets Struggle for Direction Absent of Tier 1 Data

US stocks trade mixed while Treasuries are rallying across the curve as investors digest mixed global economic data and lower oil prices.  The disappointment from weak Chinese trade data (1.8% drop in exports and 10.9% drop in imports) was partially offset by stronger-than-expected German factory orders.  Signs of prevailing headwinds for the Chinese economy weighed on oil prices, which were unable to sustain the recent boost from the expected impact of wildfires on Canada’s oil output.  WTI and Brent crude are currently down just over 2% and 3%, respectively.  Oil traders also reacted to news over the weekend that Saudi Arabia has a new oil minister as part of Deputy Crown Prince Mohammed bin Salman’s Vision 2030 reform program.  Khaled al-Falig, chairman of the state oil company Aramco, was made head of the newly created Energy, Industry, and Natural Resources Ministry.  Despite the change in leadership, market pundits believe the Saudis will maintain oil production at near record levels to push out shale producers and other producers with higher costs of production. 

There are no significant US economic releases scheduled today, but the data calendar picks up tomorrow, headlined by JOLTS Job Openings and wholesale inventories.  In the meantime, markets have been digesting a steady diet of corporate earnings, a heavy new issuance calendar, and pundit speculation on the Fed.  Bill Gross and Mohamed El-Erian, two of the world’s most influential bond investors (and both formerly of PIMCO), each warned investors not to rule out the Fed taking action in the near term, despite a slightly weaker-than-expected April payrolls report released on Friday.  Gross believes Fed Chair Yellen is more focused on wages than jobs, so the 2.5% jump in hourly earnings should offset the disappointing headline number.  El-Erian stated that the weaker dollar and recent relative calmness in financial markets should also make it easier for policymakers to take action sooner than the market may be anticipating.
The Dow is currently trading down 0.25%, while the S&P 500 and NASDAQ are up 0.10% and 0.50%, respectively.  Treasury yields and swap rates are 2-4 bps lower across all major maturities.


Ready to start a conversation?

We offer free consultations and platform demos.

Let's Talk