The JPY is the strongest and the USD is the weakest as the North American session begins.
Today at 2 PM ET (see preview here), the FOMC will announce their decision on interest rates. The expectations are for 25 basis points that would take the rate to the terminal rate outlined in the dot plot at the Feds last meeting (between 5% – 5.25% fed funds range). The odds of doing nothing did move down to the mid-80s yesterday after the KRE regional bank ETF tumbled -2.6% yesterday ($-2.60). Today that ETF is trading higher in premarket trading at $38.97 versus $38.86 at the close yesterday. PacWest Bancorp is trading at $6.81 versus $6.55 close (it fell -27.78% yesterday and is down 78% from its February high). The Fed has taken the rate from 0% to 5% within a year (the first hike was in March 2022).
Overnight, the key economic news showed New Zealand's employment change in the recent quarter was 0.8%, higher than the expected 0.5%, while the unemployment rate came in at 3.4%, below the expected 3.5%. The labor cost index for the quarter increased by 0.9%, lower than the expected 1.1%. In Australia, retail sales increased by 0.4% month-over-month, higher than the expected 0.2%. In Europe, the French government budget balance was -54.7 billion, while the Italian monthly unemployment rate was 7.8%, below the expected 8.0%. The overall European unemployment rate came in at 6.5%, lower than the expected 6.6%.
In the mortgage market, the weekly data shows mortgage applications down -1.2%. The 30 year mortgage rate fell to 6.5% vs 6.55% last week:
US Mortgage Refinance Index: 461.2 (Prev. 457.6)
US MBA Purchase Index: 165.8 (Prev. 169.1)
US Mortgage Market Index: 214.4 (Prev. 216.9)
US MBA Mortgage Applications: -1.2% (Prev. 3.7%)
US MBA 30-Yr Mortgage Rate: 6.50% (Prev. 6.55%)
Several economic releases are scheduled ahead of the FOMC decision at 2 PM ET. At 8:15am, the ADP Non-Farm Employment Change report will be released, with an expected figure of 148K, close to the forecasted 145K. At 9:45am, the Final Services PMI is set to be announced, with an expected reading of 53.7, in line with the previous figure. Later, at 10:00am, the ISM Services PMI will be released, with an anticipated result of 51.8, slightly higher than the previous 51.2. Finally, at 10:30am, the Crude Oil Inventories report is expected to show a decrease of 0.5 million barrels, compared to the previous drop of 5.1 million barrels. The private data released near the close yesterday showed oil inventories showed a greater than expected draw of -3.939M, while gasoline inventories showed a 400K build.
The price of crude oil is continuing its tumble (it fell the most sense early February yesterday) to the downside trading below the $70 level at $69.72 down $1.93 on the day as concerned about global growth continue to be pervasive.
US rates are lower by a 2 to 4 basis points.
Some of the major earnings releases this morning shows:
Yum! Brands Inc (YUM) Q1 2023 fell short of expectations:
- Adj. EPS: $1.06 (exp. $1.13)
- 13% worldwide system sales growth (excluding Russia)
- 8% same-store sales growth (exp. 5.5%)
- 5% unit growth
CDW Corp (CDW) Q1 2023. Earnings and revenues came in near expectations:
- EPS: $2.03 (exp. $2.01)
- Revenue: $5.1bln (exp. $5.1bln)
Phillips 66 (PSX) Q1 2023. Beat expectations
- Adj. EPS: $4.21 (exp. $3.56)
- Raised quarterly dividend 8% to $1.05/shr
Kraft Heinz Co (KHC) Q1 2023: Beat on EPS and came in near expectations on revenues
- EPS: $0.68 (exp. $0.60)
- Revenue: $6.4bln (exp. $6.39bln)
- Raises FY23 EPS view: $2.83-$2.91 (prev. $2.67-$2.75; exp. $2.71)
- Reaffirms FY Revenue view: +4-6%
After the close, Qualcomm, Etsy, Albemarle will release earnings. Tomorrow, Apple, Shopify, Coinbase, Draftkings, Lyft, will release after the close.
Taking a look around markets shows:
- Spot gold is trading down $1.60 or -0.08% that $2015. Yesterday the price of gold surged from flight to safety flows.
- Spot silver is trading down $0.14 or 0.55% at $25.23.
- WTI crude oil is trading down to dollars at $69.61
- Bitcoin is trading at $28,543 little higher than the 5 PM level yesterday
in the premarket for US stocks, the major indices are marginally higher:
- Dow Industrial Average is up 23.47 points after yesterday's -367.1 point decline
- S&P index is up 8.2 point after yesterday's -48.31 point decline
- NASDAQ index is up 36 points after yesterday's -132.09 point decline
in the European equity markets, the major indices are mostly higher:
- German Dax +0.69%
- Frances CAC +0.58%
- UK's FTSE 100 +0.25%
- Spain's Ibex is trading down -0.29%
in the US debt market yields are lower:
- 2 year yield 3.965% -1.4 basis points
- 5 year yield 3.431% -3.5 basis points
- 10 year yield 3.399% -4.0 basis points
- 30 year yield 3.683% -4.8 basis points
European benchmark 10 year yields are also trading lower:
