Morning Market Preview:
S&P futures are higher, up 10 to 11 points, as…
- Senate Minority Leader Mitch McConnell (R-KY) said the debt ceiling fight will be contentious but America has never before and never will default on its debt.
- Federal Reserve Vice Chair Lael Brainard said its interest rate hikes will slow the economy further this year but they must remain restrictive to cool inflation growth even more.
- Federal Reserve Bank of Boston President Susan Collins said a “slower pace” of interest rate hikes makes sense given they are getting closer to peak levels.
- U.S. Treasury Secretary Janet Yellen informed Congress and the White House that her office had begun using extraordinary measures to stave off a potential debt default until early June.
European markets rose as…
- German Producer Price Index (“PPI”) growth for December fell to 21.6% YOY, less than half the record high hit last summer and the lowest level in more than a year as cost pressures continue to recede.
- British retail sales figures for December showed the lowest sales volume since 1997 as consumer spending was not bolstered by the Christmas holiday.
- Swiss National Bank President Thomas Jordan said it will likely have to raise interest rates even more to combat inflation growth.
- European Central Bank minutes of the most recent monetary policy meeting showed members accepted a 50 basis point rate hike only after a pledge for more aggressive increases moving forward.
Asian markets gained as…
- China’s lending benchmark 1- and 5-year loan prime rates were left unchanged as the government is waiting for COVID infections to subside before introducing stimulus.
- Japan’s core Consumer Price Index (“CPI”) growth of 4% for December was well above the 2% inflation target, increasing pressure on the Bank of Japan to raise interest rates.
- South Korea’s Producer Price Index (“PPI”) growth for December eased to 6%, hitting the lowest level since April 2021, and taking pressure off the Bank of Korea to keep raising rates.
- The People’s Bank of China added another $48 billion worth of liquidity to the financial system vis reverse repurchase operations, bringing the total this week to $301.5 billion.
And ahead of…
- Fed's Collins Speaks (9 a.m.)
- Existing Home Sales for December (10 a.m.)
- ECB's Elderson Speaks (10:30 a.m.)
- Fed's Waller Speaks (1 p.m.)
- Baker Hughes Rig Count Data (1 p.m.)
- CFTC Commitment of Traders Report (3:30 p.m.)
- Fed's Williams Speaks (6:35 p.m.)
Japan's Nikkei +0.56%, Japan's TOPIX +0.58%, China's Shanghai Composite +0.76%, Hong Kong Hang Seng Index +1.82%, South Korea's KOSPI +0.63%, Taiwan's TSE +0.04%
EuroStoxx 50 +0.51%, UK FTSE +0.16%, German DAX +0.51%, French CAC +0.62%, Italian MIB +0.66%, Spanish IBEX +1.13%
Dollar +0.32%, Japanese Yen +1.43%, Euro -0.13%, British Pound -0.33%, Swiss Franc +0.50%, Chinese Yuan +0.08%
WTI Crude +0.20%
Brent Crude +0.30%
Nat Gas -1.10%
U.S. Treasury 10-yr yield +3.2 bps at 3.43%
U.S. Treasury 2-yr yield +4.6 bps at 4.16%
German 10-yr yield +8.5 bps at 2.14%
French 10-yr yield +8.8 bps at 2.57%
Italian 10-yr yield +12.7 bps at 3.90%
Japanese 10-yr yield -0.1 bps at 0.43%
BIOQ, CCBC, CMHF, FBSI, FGFH, OVLY, UBNC, VABK, WAYN, HBAN, RF, SLB, ALLY, STT, and SMIT before the open.
China – One- and Five-Year Loan Prime Rate
South Korea – PPI for December
Japan – CPI for December
Germany – PPI for December (2 a.m.)
U.K. – Retail Sales for December (2 a.m.)
ECB's Lagarde Speaks (5 a.m.)
Fed's Collins Speaks (9 a.m.)
Existing Home Sales for December (10 a.m.)
ECB's Elderson Speaks (10:30 a.m.)
Fed's Waller Speaks (1 p.m.)
Baker Hughes Rig Count Data (1 p.m.)
CFTC Commitment of Traders Report (3:30 p.m.)
Fed's Williams Speaks (6:35 p.m.)