The CHF is the strongest currency while the NZD is the weakest as the North American session begins.
In the European session, ECB policymaker Klaas Knot stated that while rate hikes beyond July are possible, they are not certain. He believes that core inflation has reached a plateau and emphasizes the need to raise rates in July. Knot expresses optimism about inflation reaching 2% in 2024. However, he acknowledges that there is still significant data to be considered between now and September. Despite being known as a hawkish policymaker, Knot is not currently pushing for a rate hike in September, likely out of respect for the ECB's agreement not to comment before the July decision is made.
The EUR is modestly higher vs the US in early trading.
Overall, the USD is little changed/mixed vs the major currencies ahead of a number of economic releases in the US this morning including retail sales, industrial production, and business inventory and housing data this morning. Canada will also release key inflation data. A summary of the economic calendar shows:
At 8:30 AM in Canada, the key CPI data will be released:
- CPI m/m is expected at 0.3%, down from the previous result of 0.4%.
- Median CPI y/y is expected at 3.7%, down from the last report of 3.9%.
- Trimmed CPI y/y is anticipated at 3.6%, slightly lower than the previous 3.8%.
- Common CPI y/y is expected at 5.0%, lower than the last report at 5.2%.
- Core CPI m/m is anticipated, with no expectation given, the previous figure was 0.4%.
The pipeline industrial product producer prices and raw material prices will also be released
- IPPI m/m is expected at -0.2%, which is higher than the previous result of -1.0%.
- RMPI m/m is expected at -0.3%, which is significantly higher than the previous -4.9%.
In the US also at 8:30 AM US retail sales will be reported:
- Core Retail Sales m/m is expected to be 0.4%, higher than the previous report of 0.1%.
- Headline Retail Sales m/m is expected to be 0.5%, higher than the previous report of 0.3%.
At 9:15 am, US industrial production and capacity utilization will be released:
- Industrial Production m/m is expected to be 0.0%, higher than the previous result of -0.2%.
- Capacity Utilization Rate is expected at 79.5%, slightly lower than the previous report of 79.6%.
At 10:00 am, several USD economic reports will be released:
- Business Inventories m/m is expected to remain the same at 0.2%, as per the previous report.
- NAHB Housing Market Index is expected to be 56, slightly higher than the previous report of 55.
Also at 10 AM FOMC Member Barr is scheduled to speak.
US stocks are modestly lower in early trading. There has been a number of earnings released this morning highlighted by Bank of America.
- Bank of America profit increased by 19% to $7.41 billion compared to the previous year, exceeding analysts' expectations of $0.84 at $0.88 per share. Revenue also grew by 11% to $25.2 billion, surpassing the estimated $24.98 billion. Bank of America added $256 million to its reserves to cover potential loan losses.
In other earnings releases today:
Morgan Stanley (MS) Q2 2023:
- EPS: $1.24 versus expected $1.15)
- Revenue: $13.457 billion versus expected $13.08 billion)
Lockheed Martin Corp (LMT) Q2 2023:
- EPS: $6.63 versus expected $6.45)
- Revenue: $16.70 billion versus expected $15.91 billion)
- Raised FY23 EPS view to $27.00-$27.20 from $26.60-$26.90 versus expected $27.15)
PNC Financial Services Group Inc (PNC) Q2 2023:
- EPS: $3.36 versus expected $3.28)
- Revenue: $5.293 billion versus expected $5.45 billion)
- Net Interest Income: $3.51 billion versus expected $3.48 billion)
The Bank of New York Mellon Corp (BK) Q2 2023:
- Adjusted EPS: $1.38 versus expected $1.22)
- Revenue: $4.45 billion versus expected $4.37 billion)
Charles Schwab reported:
- EPS $0.75 vs $0.71 exp
- Revenues $4.66B vs 4.61B exp
Tomorrow, Tesla, Netflix, IBM all announce their earnings.
A slew of regional banks will also start to announce on Wednesday and Thursday. First Horizon National, Citizens Financial, M & T Bank, U.S. Bancorp, and Zions Bancorp will release tomorrow. On Thursday East West Bancorp, Webster Financial, Synovus, Truist Financial will release. All those banks are larger holdings in the KRE regional bank index. Focus will be on the change in the deposit base for the smaller regionals.
A snapshot of the markets as the NA session gets underway shows:
- Crude oil is trading up $0.19 or 0.26% $74.35
- Spot gold is trading up $11 or 0.56% $1965.33
- Silver is trading up $0.08 or 0.32% at $24.88
- Bitcoin is trading at below the $30,000 level at $29,918
In the premarket for US stocks, the major indices are trading modestly lower. Yesterday, the Dow rose for the 6th consecutive day. The S&P and NASDAQ both rose and are up 5 of the last 6 trading days
- Dow Industrial Average is trading down -14.23 points after yesterday's 76.32 point rise.
- S&P index is down -4.04 points after yesterday's 17.37 point rise
- NASDAQ index is trading -19.9 points after yesterday's 131.25 point rise
In the European equity markets, the major indices are lower
- German DAX, -0.10%
- France's CAC, -0.06%
- UK's FTSE 100, -0.08%
- Spain's Ibex, -0.47%
- Italy's FTSE MIB, -0.04% (delayed).
In the Asian Pacific market today, markets closed mixed:
Japan’s Nikkei 225, 0.32%
China’s Shanghai Composite, -0.37%
Hong Kong’s Hang Seng, -2.05%
Australia’s S&P/ASX 200, -0.20%
In the US debt market, yields are lower in early US trading
- 2-year yield 4.691%, -4.0 basis points
- 5-year yield 3.947% -5.6 basis points
- 10-year yield 3.750% -4.7 basis points
- 30-year yield 3.890% -3.2 basis points
In the European debt market, benchmark 10-year yields are lower as well.
