April 10, 2023
Good morning,
Markets of all sorts have had a fairly quiet overnight session thanks to the Easter Monday holiday in most of Europe. However, Futures (remember, capital “F” alone denotes the king contract, the S&P 500 Index futures front contract) fell from unchanged to down -.50% at 8am ET with no headline to point to. Perhaps because they shrugged off a solid employment figure on Friday and are just marking positions for a more likely rate hike at the next Fed meeting in 3 wks (May 2).
Coming up, It will be another week of key inflation data and Fed speak reconciliation. Wednesday morning’s CPI readings are extremely important, given that inflation remains very high against a market narrative that hopes the Fed is contemplating an end to its hiking cycle. Wednesday afternoon’s FOMC minutes will be under the market’s microscope looking for more clues about the tightening cycle. Earnings reporting season begins on Friday with some banking company results. Important among them will be JP Morgan for a market looking for insight into any lingering stress from last month’s bank failures.
Without bank failure distractions, markets are once again focused on the arc of the Fed’s current tightening cycle. And once again, markets do not believe the cycle will go as far as Fed Chair Powell suggests. Sometimes it can feel like a silly business.
Be well,
Mike