Good morning,
 
Yesterday US markets closed lower for the third consecutive session as global yields continued to move to the upside. The S&P 500 500 fell 0.7% while small/midcap indices which are more exposed to the higher interest rate environment underperformed falling ~1%. For the first time we did start to see some dip buying in semis and memory stocks which sharp intraday reversals to end the day modestly higher. Energy, defensive and yield oriented sectors outperformed.  
 
Futures were modestly lower overnight but started to reverse right around 10:30 as the New York Knicks began their historic comeback, and the vibes are high down here on the trading floor. Futures have been moving throughout the overnight session as yields and oil both pullback modestly. On the Iran front there have been reports of ships from China, India and South Korea moving through the Strait which is helping oil prices pullback >2%. There is still some hope for a diplomatic resolution with officials from Pakistan reportedly heading to Iran. Iran said that if President Trump follows through with his “big hit”  it will retaliate beyond the Middle East. The move lower in oil and a tame CPI report in the UK has helped global yields to pullback with Treasury yields down 3-5bps overnight but have started to move higher as we approach the bell. Thus far the retail earnings this morning have been solid though the price action is mixed. In premarket trading semis, memory, other AI adjacent stocks are moving higher.
 

 
It is a light day of economic data. This afternoon there is a 20yr auction and the FOMC minutes will be released at 2:00.
 
Government Yields

• US 2yr -1bps to 4.11%, 5yr -2bps to 4.31%, 10yr -1bps to 4.65%, 30yr -1bps to 5.17%
• USD index: +$0.05 to $99.32

 
Markets in Asia were mostly lower overnight. South Korea and the Nikkei were both down ~1% with some tech weakness. The Samsung strike could begin on Thursday though there are reports the government will intervene. There was a 20yr auction in Japan which had solid demand which is another factor in the pullback in global yields. In China the PBOC left its 1/5yr loan prime rates unchanged. In a surprise the Indonesian central bank surprised markets by hiking 50bps. European indices have been moving modestly higher overnight and are hovering around yesterday’s highs. The inflation data in the UK helped Gilt yields pullback ~8bps across the curve.
 
 
 
Oil prices are now down ~2.5% ahead of this morning’s oil inventory data.  The metals complex is trying to stabilize after the recent weakness while ag is giving back some of the recent gains. The crypto complex is also trying to stabilize after the recent weakness. Bitcoin is up just under 1% trading ~77.5k
 

 
Corporate headlines:

• At a high level the retail earnings look pretty good though the stock response in the pre-market has been mixed TJX and VFC are both modestly higher while Target, Lows and Hasbro are in the red.
• Cava is a standout up 10% after strong numbers, the MAC Desk is doing their part to support the company, with a weekly pilgrimage.
• Toll Brothers is trading modestly higher. Expectations were quite low the company beat for the quarter and raised annual guidance.
• Tech earnings were also solid but stocks are trading lower (ADI/KEYS). The big kahuna reports tonight after the close.
• IPPs are trading higher after a positive regulatory update from PJM yesterday

 
Earnings:
After-Market: CAVA, KEYS, TOL, XP
Pre-Market (Wed): ADI, HAS, LOW, TGT, TJX, VFC
After-Market:  ELF, ENS, INTU, NDSN, NVDA, URBN
 
Economic Data:
US:

• Mortgage apps: -2.3% w/w prior 1.7%; 30yr 6.56% prior 6.46%
• 10:00 Fed Barr
• 10:30 Oil Inventories
• 1:00 20yr auction
• 2:00 FOMC Minutes

Global:

• China 1/5 yr Loan Prime rates left unchanged at 3% and 3.5%
• Indonesia raised rates by 50bps, more than expected, to 5.25%
• Germany PPI: 1.2% vs. 1% cons,. prior 2.5%
• UK CPI/Core: 0.7%/0.7% vs. 0.9%/0.8% cons., prior 0.7%/0.4%