Inside Markets — Upward Momentum
The S&P 500 (SPX) has been able to keep its upward momentum despite rising bond yields. Over the last six sessions, we’ve seen growth data inflect higher, while inflation data has cooled.
Inside Markets — US Data In Focus
US data is back in focus after a steep drop in weekly jobless claims and big upward revision to Q1 GDP. The improved data leads to another leg higher in the US Economic Surprise Index (ESI), higher bond yields and cyclical sector outperformance.
Inside Markets — Near Term SPX
Mixed messages inform the near term SPX outlook. The overbought status we referenced for the S&P 500 (SPX) on Friday June 16 was derived from slowed stochastic oscillator that measures price and time.
Inside Markets — Better Growth Data
The primary driver this morning is US economic data that is better than expected. May durable goods orders posted an upside surprise for a third straight monthly increase.
Inside Markets — Quarter End
Equities are starting the week mostly lower into month-end and quarter-end rebalancing. Given the recent rally in equities and sell-off in bonds, we estimate an incremental ~$50B of equity supply will hit this week.
Inside Markets — PMI Miss
US, Eurozone and UK flash manufacturing PMI missed expectations and fell deeper into contraction, while services held up better. The US PMI data showed a cooling in employment, but firming wage pressures.
Inside Markets — Growth Outlook
Tomorrow brings flash PMIs for June which will provide incremental guidance on the growth outlook. Expectations are for US flash manufacturing PMI to remain in contraction at 48.5, but recent strength in cyclical equity sectors may be signaling a higher print.
Inside Markets — Recession Template
Markets are waiting for a traditional recession or soft landing to follow the Fed’s tightening cycle, but there may be a third template that fits better.
Inside Markets — Consolidation
As the S&P 500 has rallied +6.8% over the last five weeks to technically overbought levels, consider markets can stay overbought or oversold for several weeks but consolidation to technical support levels near 4200 should first be considered a healthy development.
Inside Markets — Overbought
The S&P 500 has gained +5.7% since the index broke technical resistance at ~4200. Thin leadership and narrow breadth on the approach to 4200 were reasons to remain tactically bearish.