Ear to the Ground for Fresh Fed Speak | Morning Express | 2/22/2023
Posted: Feb. 22, 2023, 7:52 a.m.
- Minutes from the February 1st Fed meeting are due at 1:00 pm CT, yes, at that meeting Fed Chair Powell took a victory lap in his press conference using the word disinflation twelve times.
- Since that meeting, blow-out Nonfarm Payrolls with 517,000 jobs created in January, steady wage growth, sticky CPI at 6.4% y/y (vs 6.2% expected) and +0.5% m/m, the biggest jump in seven months, hot PPI at +0.7% m/m, and strong January Retail Sales.
- Flash PMIs for February, released yesterday, were stronger than expected across the board, highlighted by the Services sector avoiding contraction at 50.5 versus 47.2 expected.
- The consumer is resilient and the housing market is improving, this equates to a tougher battle with inflation, all underpinned by a tight job market.
- Keep an ear to the ground for fresh Fed speak, St. Louis Fed President Bullard reiterated the Fed should only slow hikes once its terminal rate is reached, and he projects reaching 5.375%, equating to 75bps more of hikes.
- Bullard added that consumers are trading down, and this creates disinflation, disinflation and a strong jobs market can both take place, and markets are overpricing the risk of a recession, stocks responded favorably from session lows, and Dollar slipped from highs after his comments.
- Treasury yields retreated after Bullard’s comments and the CME’s FedWatch Tool slipped from a 25% probability of 50bps in March to a 21% probability.
- TREASURY SUPPORT LEVELS. Risk-appetite improvement on the heels of Bullard also as Treasuries test and pare back from key levels:
- U.S. 2-year yield hit 4.738% overnight, November high was 4.881%
- U.S. 10-year yield hit a high of 3.968%, closing in on big round 4.0%
- 10-year futures testing into the November 10th soft-CPI spike at 110-22
- Major three-star support pocket in 30-year Bond futures at 123’11 – 124-11
- U.S. Treasury auctions $43 billion 5-year Notes at noon CT today, and $35 billion 7-years tomorrow.
- TJX highlights a thin earnings calendar this morning, beating top-and-bottom-line estimates, +0.5%.
- NVIDIA is the big one today, reports after the bell, along with PXD, EBAY, MOS, and others.
- Hang Seng gearing for a fourth losing week in a row and -0.51% on the day despite strong earnings from Baidu (+6.53%). Alibaba due tomorrow. Where is support in Hang Seng? Hang Seng futures are tradable, contact your Blue Line Futures representative. Chart below.
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E-mini S&P (March) / E-mini NQ (March)
S&P, yesterday’s close: Settled at 4005.75, down 81.75
NQ, yesterday’s close: Settled at 12,096.75, down 293.25
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NQ (March)
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Crude Oil (April)
Yesterday’s close: Settled at 76.36, down 0.19
- The private API survey is due at 3:30 pm CT
- Early estimates for tomorrow’s official EIA data are +1.166 mb Crude, +1.543 mb Gasoline, and +0.447 mb Distillates.
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Gold (April) / Silver (March)
Gold, yesterday’s close: Settled at 1842.5, down 7.7
Silver, yesterday’s close: Settled at 21.89, up 0.175
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Silver (March)
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