Sleepy Friday so Far today…Russell annual Reconstitution today, likely to cause a bit of volatility around the close
A bit of” not so” good news:
A past 48 hours tally – Oyo, the Softbank-backed lodging firm, informed most of the staff it had furloughed in April that they would be permanently laid off. Macy’s cut 3,900 of its corporate staff. And both Harley Davidson and General Motors will be laying off factory workers as the pent-up demand that was due to accompany reopening refuses to manifest. As per Cuneyt Kazokoglu, head of oil demand at Facts Global Energy in a Financial Times interview, “About 40% of U.S. gasoline demand is from states that are seeing the biggest surge in Covid-19 cases.” (quill Intelligence)
Yesterday’s Bank stress tests resulted in the Fed telling the US biggest banks that they can’t increase dividends or resume buybacks through at least the third quarter as uncertainty over the course of pandemic weighs on lenders(BBG),….Banks a touch weaker Some of the weakness contained though “ The Federal Deposit Insurance Commission and Office of the Comptroller of the Currency said Thursday they are planning to loosen some of the restrictions that were put in place via the Volcker rule, shifting to allow banks to make large investments into venture capital and related funds.” Pro farmer
Virus news still dominating news flows one item of Note “notably new in the news flow with Covid-19 still dominating. The virus continues to surge across the sunbelt rendering a record number of new infections cases and now most notably among a younger cohort (20-40-year-old) of the population. The good news is that given this heartier contingent death rates are falling even as the infections surge. The bad news is that this group is more apt to spread the virus” IFR news
Even though plenty of bad News out there SPX MTD is +1.3%,Dow +1.4% Nasdaq +5.5% Stoxx 50 +7%.Dax +6%.NKY +2.9% the rationale is that the “fed has our backs” and that Stimulus will be increased if markets become nervous A fed put as it Is known. Bond markets also lackluster as they to worry about the Fed, Short term yields tied to Zero cant fluctuate too much, Long end can’t sell of too much regardless of any news, Increased Auctions as the Fed will adjust their QE duration a bit and Focus on buying the long end to tame any fire up in yields. Dollar index Steady to higher But Strong against peso +.7% and +.9% vs Real. A bit of Good news I guess LME Copper, traded above 6000 for the first time in a few months. MTD Lme copper +10%, Shanghai Steel +6% And Gold +2%
Second tier Data points today Likely to be a sideways choppy trade as Summer Friday’s have arrived. Next week is chock full of Economic data, Quarter end so traders may lie in wait for next week’s action. Gold sideways, Nat Gas trying to bounce after yesterdays Sell off, Today is last day to trade July gas, Oil a touch heavy, treasuries and Bunds a bit higher.
Chart of 10-year yields, a break of the uptrend but lacking momentum