Two-year government bond yields, the most sensitive to changes in interest rates, were 5 basis points higher at 3.308% in overnight trading, while 10-year bonds traded at 2.868%. The US Treasury curve remains steeply inverted — a condition that has preceded nearly every recession for the past 25 years — even as the Atlanta Fed’s GDPNow forecasting tool suggests the economy is growing at a 2.5% clip.
The US dollar index, which tracks the greenback against a basket of six global peers, was up 0.03% at 106,608.
In other markets, oil prices extended their recent decline, bringing US crude into sight of a six-month low ahead of the Energy Department’s weekly data on domestic crude oil inventories at 10:30 a.m. GMT.
WTI crude oil futures for September delivery were 27 cents lower at $85.26 a barrel, while October Brent contracts, the global benchmark, fell 55 cents to $91.75 a barrel.
In overseas markets, European equities had changed little, with the Stoxx 600 rising 0.05% during early trading in Frankfurt, while in Asia overnight the region-wide MCSI ex-Japan index 0.16% rose and the Nikkei 225 rose 1.23% to be retaken. for the first time in seven months the level of 27,000 points.
On Wall Street, futures pegged to the S&P 500 point to a modest opening bell dip of 3 points, while those on the Dow Jones Industrial Average are priced at a pullback of 60 points. Futures linked to the technology-focused Nasdaq point to a 60-point slip.
2. — Focus on Fed Minutes as High Rate Hike Bets Accelerate
The minutes of the Federal Reserve’s July policy meeting likely point to smaller rate hikes in the second half of the year, with Chairman Jerome Powell and his colleagues content to focus on a wealth of data ahead of their next decision in September.
The July minutes, published at 2 PM GMT, will set out the rationale behind the Fed’s second consecutive 75 basis point rate hike, with the benchmark Fed Funds interest rate at a range of 2.25% to 2.5%. came. Powell said at the time that the Fed “wouldn’t hesitate” to make another major rate hike if the Open Markets Committee saw fit.
Since then, the overall CPI has slowed significantly, reaching a pace of 8.5% in July, with readings for August, as well as two more PCE price index releases and another jobs report expected before the September 21 decision.
The CME Group’s FedWatch tool now suggests a 48.5% chance of another 75 basis point rise in September, with bets on a smaller 50 basis point move at 51.5%, essentially near the same levels in the immediate aftermath of the July surge, but about 10 percentage points higher than a week ago.
3. — Retail sales on deck as gas prices tumble
Retail sales, as well as key industry earnings, will be in the spotlight again on Wednesday, as the Commerce Department releases official July data ahead of the start of trade, likely illustrating the impact of falling domestic gas prices.
Total retail sales are likely to be up about 0.1% this month, economists suggest, as total numbers fall from the June peak of $680.6 billion amid continued decline in gasoline prices. Core retail sales, which remove the impact of volatile components such as food and energy, could actually contract by about 0.1%.
Bloomberg data suggests that Americans are spending $400 million less each week as a result of the decline in gas prices, which have fallen for 61 consecutive days to a national average of about $3,943 per gallon, according to data from the American Automobile Association.
“The overarching message will likely be that consumer demand has declined, but not collapsed,” said Ian Shepherdson of Pantheon Macroeconomics. “People are choosing to soften the blow of the gas price hit by phasing out some of the massive savings accumulated during the pandemic.”
4. — Target Higher After Walmart Surprise Raises Second Quarter Earnings Expectations
( stocks bounced higher in pre-market trading ahead of the much-anticipated second-quarter retail results ahead of the opening bell. TGT)
Target, which warned in June that the larger-than-expected build-up of 35% of total inventories would likely lead to price cuts and that operating margins would narrow to about 2% in the second quarter of the year before settling into the second half of the year. , it is expected to make a net profit of 72 cents per share on revenue of $26.04 billion.
Target’s spring warning sparked the biggest one-day sell-off in its stock in three decades, but a surprisingly solid quarter from Walmart yesterday, as well as plunging gas prices and improving consumer confidence, could give the retailer some unexpected optimism as it heads into the second half of the year. year.
Target stocks were up 0.67% in pre-market trading to indicate an opening bell price of $181.40 apiece.
5. — Bed, Bath, and Beyond Rises in Revived Meme-Stock Rally
Bed, Bath & More
( stocks surged higher in pre-market trading as the meme stock favorite extended gains after GameStop bullish options bet BBBY) ( chairman Ryan Cohen. GME)
Cohen, who built a position in the homeware retailer last year and pushed for major changes, including the sale of its buybuy Baby division, has bought call options that expire in January next year at a strike price of between $60 and $60. $80 each, according to Securities and Exchange Commission filings.
A call option gives the buyer the right, but not the obligation, to buy shares at a specified price in the future.
Bed, Bath & Beyond shares are up more than 350% in the past three weeks, thanks to remarkably high trading volume amid a surge in interest in the stock, which could also be linked to a so-called ‘short squeeze’. ‘ which are the investors who bet against a particular stock.
Bed, Bath & Beyond shares were up 8.65% in pre-market trading to indicate an opening bell price of $24.50 apiece.