By Bill Hornbarger, Chief Investment OfficerPrint This Post
Three Things to Watch
- Earnings season is winding down with the previous two weeks the busiest of the period. However, several closely watched companies will report this week, including Disney, Tyson Foods, Coinbase, and Ralph Lauren. Overall, 87% of the S&P 500 companies have reported results with 75% reporting positive surprises and a projected earnings growth rate of 6.7% for the S&P 500 in aggregate.
- The economic calendar will be dominated by inflation news including consumer prices (CPI), producer prices (PPI), import and export prices, and the University of Michigan one- and five-year inflation expectations. Inflation remains elevated and the No. 1 focus of both the Fed and the markets, but overall CPI and PPI are expected to tick slightly lower on a year-over-year basis for July.
- Nonfarm productivity will be released on Tuesday and is expected to be firmly in negative territory for the second consecutive month. Higher labor costs and falling productivity could eventually lead to a hiring slowdown/freeze unless economic growth rebounds.
Three Things to Know
- The one-year Treasury bill yield has moved up to 3.27%, the highest since late 2007, and up from 0.37% to start the year. The one-year T-bill traded at a record low in March 2020 of 0.04%. (Source: Bloomberg)
- The U.S. 10-year Treasury is now inverted to the six-month Treasury bill and the spread between the two- and 10-year Treasury is currently -40 basis points, the deepest inversion since the early 1980s. (Source: Bloomberg)
- The National Bureau of Economic Research’s Business Cycle Dating Committee maintains a chronology of U.S. business cycles. The chronology identifies the dates of peaks and troughs that frame economic recessions and expansions. The NBER’s definition emphasizes that a recession involves a significant decline in economic activity spread across the economy and lasts more than a few months. In their interpretation of this definition, they treat the three criteria — depth, diffusion, and duration — as somewhat interchangeable. The committee’s approach to determining the dates of turning points is retrospective. (Source: The National Bureau of Economic Research)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.