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Pre-Markets Bounce Back Ahead of Big Data: CPI, Q3 Earnings
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Tuesday, October 8th, 2024
Pre-market futures look to build back from the sell-off in Monday’s session, which saw the Dow slide -0.94%, the S&P 500 -0.96% and the Nasdaq -1.18%. At this hour, the Dow is up +40 points, the S&P +20 points and the Nasdaq +80. Bond yields continue to rise, with the 10-year now back over +4% and the 2-year just beneath it.
Advanced Trade Deficit Shrinks to $70.4 Billion
The main economic report out this morning is the Advanced Trade Deficit for August, which came in at -$70.4 billion from expectations of -$70.8 billion. The slightly modified previous month was upwards (downwards?) of -$78 billion for July, but there is some context to be had here:
When we think about trade deficits, especially recently, what first may come to mind is the recent port strike affecting most of the Eastern Seaboard and parts of the Gulf of Mexico. We look at July data as somewhat artificially drawing forward some of that trade balance to get ahead of the strike, which thankfully has already been resolved (or postponed until after the holiday season), so these numbers come with a bit of near-term “noise.”
Big Week for Consumer Reports: CPI, PPI
On Thursday and Friday of this week, we’ll see Consumer Price Index (CPI) and Producer Price Index (PPI) figures out for September. These reports have been quite favorable over the past few months, after staying problematically static earlier in 2024. Expectations are for CPI month over month to shrink to +0.1%, +0.2% on core (stripping out volatile food and energy costs).
Year over year, CPI headline — aka the Inflation Rate — is expected to come down to +2.3% from +2.5% the prior month, which would be a level of lower inflation not seen since early 2021, ahead of the Great Reopening. Core CPI looks notably stickier: +3.2%, the same as the previous month. Still, this is well off the +6.6% peak we saw two years ago, which were the highest levels in more than 40 years.
PPI on Friday depicts an even wider discrepancy between headline numbers (year over year) and core: +1.7% and +3.3%, respectively. But here is where we see the real strain on supply chains which led to rampant inflation in the first place: we saw +11.7% PPI growth on this metric back in March of 2022 — the same month the Fed began raising interest rates.
FedSpeak Ahead of Q3 Earnings Season
The deluge of Q3 earnings begins at the end of this week, when the biggest of the big banks — like JPMorgan Chase (JPM - Free Report) and Citigroup (C - Free Report) — report earnings. Of course, we’ve already begun to have S&P 500 companies report for Q3, including Pepsi (PEP - Free Report) this morning (it beat by a penny) and Delta Air Lines (DAL - Free Report) on Thursday. But Q3 earnings season will really pick up pace next week and the week after.
Today after the open, we'll hear from Atlanta Fed President Bostic and Boston President Collins. Also Vice Chair Philip Jefferson makes an appearance. Look for Fed members to fill up the calendar throughout the week.
Image: Bigstock
Pre-Markets Bounce Back Ahead of Big Data: CPI, Q3 Earnings
Tuesday, October 8th, 2024
Pre-market futures look to build back from the sell-off in Monday’s session, which saw the Dow slide -0.94%, the S&P 500 -0.96% and the Nasdaq -1.18%. At this hour, the Dow is up +40 points, the S&P +20 points and the Nasdaq +80. Bond yields continue to rise, with the 10-year now back over +4% and the 2-year just beneath it.
Advanced Trade Deficit Shrinks to $70.4 Billion
The main economic report out this morning is the Advanced Trade Deficit for August, which came in at -$70.4 billion from expectations of -$70.8 billion. The slightly modified previous month was upwards (downwards?) of -$78 billion for July, but there is some context to be had here:
When we think about trade deficits, especially recently, what first may come to mind is the recent port strike affecting most of the Eastern Seaboard and parts of the Gulf of Mexico. We look at July data as somewhat artificially drawing forward some of that trade balance to get ahead of the strike, which thankfully has already been resolved (or postponed until after the holiday season), so these numbers come with a bit of near-term “noise.”
Big Week for Consumer Reports: CPI, PPI
On Thursday and Friday of this week, we’ll see Consumer Price Index (CPI) and Producer Price Index (PPI) figures out for September. These reports have been quite favorable over the past few months, after staying problematically static earlier in 2024. Expectations are for CPI month over month to shrink to +0.1%, +0.2% on core (stripping out volatile food and energy costs).
Year over year, CPI headline — aka the Inflation Rate — is expected to come down to +2.3% from +2.5% the prior month, which would be a level of lower inflation not seen since early 2021, ahead of the Great Reopening. Core CPI looks notably stickier: +3.2%, the same as the previous month. Still, this is well off the +6.6% peak we saw two years ago, which were the highest levels in more than 40 years.
PPI on Friday depicts an even wider discrepancy between headline numbers (year over year) and core: +1.7% and +3.3%, respectively. But here is where we see the real strain on supply chains which led to rampant inflation in the first place: we saw +11.7% PPI growth on this metric back in March of 2022 — the same month the Fed began raising interest rates.
FedSpeak Ahead of Q3 Earnings Season
The deluge of Q3 earnings begins at the end of this week, when the biggest of the big banks — like JPMorgan Chase (JPM - Free Report) and Citigroup (C - Free Report) — report earnings. Of course, we’ve already begun to have S&P 500 companies report for Q3, including Pepsi (PEP - Free Report) this morning (it beat by a penny) and Delta Air Lines (DAL - Free Report) on Thursday. But Q3 earnings season will really pick up pace next week and the week after.
Today after the open, we'll hear from Atlanta Fed President Bostic and Boston President Collins. Also Vice Chair Philip Jefferson makes an appearance. Look for Fed members to fill up the calendar throughout the week.
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