Monday market minute
- Global stocks have moved on last week’s softer-than-expected May payroll data and a historic, albeit early, deal on corporate taxes by G7 finance ministers.
- The tax commitment calls for a minimum corporate tax rate of 15%, but needs both the cooperation of the G20 and the support of legislatures around the world before it can take effect.
- Oil prices are down from multi-year highs last week as the dollar gains ground and traders post gains.
- Yields on the benchmark 10-year notes decline to 1.579%, while the dollar index gains 0.1% to trade at 90.187 following last week’s payroll data.
- CDC data shows that 140 million Americans have been fully vaccinated against the coronavirus, with about 301.6 million doses administered as of Sunday.
- US equity futures suggest a weaker open ahead of a dovish week of data release, but highlighted by a key reading for May inflation on Thursday.
Wall Street futures traded modestly lower on Monday, with Treasury yields falling and the dollar stable, as investors headed for another week dominated by inflation concerns, with a key reading. of consumer prices on Thursday that will provide the latest downward test from the Federal Reserve. rate stance.
Last week’s softer-than-expected employment report, which included the addition of 559,000 new jobs compared to 2% year-on-year gains in average hourly earnings, was a reminder to investors that faster inflation remains embedded. in the economy even if labor markets continue to lag behind the broader domestic recovery.
The Commerce Department will release May CPI data on Thursday, after the 4.2% rate, the highest in the decade of last month, in what could be the most severe test yet for the “transitory inflation narrative.” “from the Fed.
Treasury Secretary Janet Yellen offered an early assessment of rates while defending President Joe Biden’s $ 4 trillion budget, telling reporters in London over the weekend that “if we end a rate environment of slightly higher interest, it would actually be an advantage from the point of view of society and the point of view of the Fed. “
However, rate traders seem less impressed with the CME Group’s FedWatch tool indicating just a 7% probability of a rate move in 2021, down from 10% a month ago.
Meanwhile, with markets well beyond the first quarter earnings season, investors’ focus is likely to shift to government policy following the weekend’s agreement between G-7 finance ministers on a minimum corporate tax rate and Wednesday’s opening debates in Congress on President Joe Biden’s $ 1.7 trillion. infrastructure bill.
The G-7 deal, while certainly historic, must also pass a number of national legislatures, not to mention it must be approved by recalcitrant G-20 leaders, before it has any impact on tech giants like Apple, Google, Facebook. . and Amazon, and that process could take several years.
Monday’s impact appears, at best, attenuated, with futures contracts linked to the Nasdaq Composite index indicating a modest 25-point decline, bolstered in part by lower 10-year Treasury yields in reference, which fell to 1,579% in night operations.
Meanwhile, contracts linked to the Dow Jones Industrial Average have a gain of 40 points, while those linked to the S&P 500 have a price retracement of 1 point at the beginning of the trade.
Tesla (TSLA) – Get report Shares were 1.3% lower in premarket trading following a weekend Tweet from founder and CEO Elon Musk announcing the cancellation of the automaker’s ‘Plaid +’ luxury sedan, while General Motors (GM) – Get report gained 0.43% thanks to a $ 5 price target increase, to $ 70 per share, from Daiwa Capital Markets.
Stocks were similar in Europe and Asia today as well, with both markets moving in and out of positive territory to start the trading week, even after a much stronger than expected reading for imports from China during the month of May. which increased 51.1% from last year thanks in part to record increases in a variety of commodity prices.
Meanwhile, oil prices fell from multi-year highs as the dollar gained traction against its global currency pairs and traders posted gains from last week’s 5% rise.
WTI futures contracts for July delivery fell 58 cents to $ 69.04 a barrel, while Brent futures for August, the world benchmark, fell 64 cents to $ 71.25 a barrel.