Thursday market minute
- Global stocks were mixed in the face of Thursday’s crucial May CPI reading, which could provide the severest test to date for the Fed’s ‘transitory’ inflation narrative.
- Core prices were up 3.5% from last year, the fastest pace since 1992, with a faster-than-expected overall reading of 5%.
- The European Central Bank made no changes to its 0% benchmark interest rate, saying that support from the emergency bond market would remain in place “until it judges that the crisis phase of the coronavirus is over.”
- Yields on the 10-year benchmark notes rise to 1,526% following a solid auction of $ 38 billion in reopened notes and inflation figures.
- Retail capital volumes return to January peaks amid broader June market calm, with new names like Aethlon Medical, GEO Group, and World Wrestling Entertainment added to the list of meme share winners.
- GameStop posts a loss in the first quarter, appoints two Amazon executives to a key leadership role and revealed plans for a 5 million share sale after the close of business on Wednesday.
- CDC data shows that 141 million Americans have been fully vaccinated against the coronavirus, with about 304.7 million doses administered as of Wednesday.
- US equity futures suggest a mixed open following faster-than-expected May inflation data and another drop in weekly jobless claims.
US equity futures rose on Thursday, and Treasury yields held firm at multi-week lows, following a crucial reading of May inflation that could define the Fmederal Reserve the short-term policy trajectory and shake up global markets from your recent June truce.
Annual headline inflation soared to 5% last month, BLS data indicated, while so-called core inflation was set at 3.5%, the fastest pace since 1992. Meanwhile, weekly jobless claims fell to a new post-pandemic low of 376,000 for the period ending June 5, further confirming the slow but steady recovery in the labor market.
After reading 4.2%, the high of the April decade, inflation data for May could challenge the Fed’s insistence that inflationary pressures will ease during the second half of the year as necks are eased. supply chain bottlenecks and bottom-line effects – like the oil price crash last year – are out of the headlines’ calculations.
Bond markets, however, appear much more optimistic: Benchmark 10-year bond yields hit a multi-month low of 1,472% yesterday, and held slightly above the 1.52% threshold even after the sale of $ 38 billion in new notes that attracted strong demand from both foreign and domestic investors and the May interest rate shocked markets by 5%.
However, a warmer-than-expected CPI reading could change later in the session and trigger some movement in stocks, which have been in range for much of the past three weeks, albeit a long way from hitting highs. historical. as volumes decline and volatility drops to a one-year low.
Meanwhile, retail investors have been out of the loop, pushing daily activity to its January peak and sparking big moves in so-called meme stocks, including favorites like GameStop. (GME) – Get report but also new names like Aethlon Medical (AEMD) – Get report, which increased almost 400% in yesterday’s session alone.
Bluechip names like Apple (AAPL) – Get report, Tesla (TSLA) – Get report and Merck (MRK) – Get report are the most active stocks in the pre-market rankings this morning, however, suggesting that normal service may resume as we head towards the 8:30 a.m. May CPI reading and the rate decision. of interest of the European Central Bank at 7:45 am.
Futures contracts tied to the Dow Jones Industrial Average suggest an opening bell profit of 160 points for the 30-share average, while those tied to the S&P 500 are priced at 12 points. Nasdaq futures point to a 15-point advance.
Shares of GameStop also moved after last night’s ‘tape bomb’ with information from the Reddit retail favorite, falling 7.4% to $ 280.30 after posting a loss in the first quarter, appointed two former Amazon executives to key leadership roles, revealed plans for 5 million. sale of shares and disclosed a request for documents from the Securities and Exchange Commission.
Away from equities, global oil prices returned modestly higher on Thursday, pushing WTI crude to more than $ 70 a barrel, even after disappointing data on gasoline demand from the Department of Energy raised questions yesterday. on the pace of driving and domestic travel during the summer months.
Brent crude contracts for August delivery, the global benchmark, added 41 cents to trade at $ 72.63 a barrel, while WTI crude rose 37 cents to $ 70.32 a barrel.
In Europe, stocks moved lower after the European Central Bank made no changes, as expected, to either the pace of the bank’s € 1.85 trillion pandemic bond purchase program or its rate of interest. historical interest low of 0%. The focus now shifts to President Christine Lagarde’s press conference at 8:30 am ET.
Overnight in Asia, Japan’s Nikkei 225 closed 0.34% higher at 28,958.56 points after Prime Minister Yoshihide Suga indicated that the country’s vaccine launch should be completed no later than November, which which adds to the optimism of a faster-than-expected recovery for the second largest in the region. economy.
Meanwhile, the MSCI ex-Japan index rose 0.47% heading into close of trading.