STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA
Published on 9/10/26 (a/o 9:00 am)
Good morning,
Yesterday US equities were under almost as much pressure as Drake Maye last night. The S&P 500 fell ~0.5% with broad based weakness leaving the equal weight version of the index down 1%. AI tech hardware outperformed again amidst positive management commentary at sell side conferences and as recent model releases continue to receive positive reviews, outside of the guy who is calling for the extinction of the human race. Oil prices extended to the upside with ICE Brent breaking back above $100. This along with some disappointment in the size of the announced Treasury buyback pushed yields higher, despite a reasonably strong 10yr auction.
S&P futures tried to bounce modestly overnight but have turned lower as oil prices have accelerated to the upside. Houthis have reportedly seized control of the port city of Mocha in the Bab el-Mandeb Strait sending ICE Brent it up >4% currently trading above $105. This morning’s PPI was largely in line with expectations but did accelerate from last month. This along with the move in oil is weighing on Treasuries with yields up >5bps across the curve. President Trump’s pledge to pay a $5k dividend if Republicans win mid-terms is not necessarily helping the cause. S&P futures have accelerated to the downside looking down ~0.5%, which would put the cash index right around its 50d ma.
Headline PPI was inline on a m.m basis (+0.4%) and last month was revised up from 0.0% to 0.1%. Core m.m of 0.2% was slightly below the 0.3% consensus, while core y.y was inline (+4.6%). Final demand goods rose 1.1% m/m but more than 75% of that was Energy. Ex-Energy and Food it was up 0.4%. Final Demand Services was up 0.1%, driven by transportation and warehouse services. Trade services, a volatile measure (i.e. margins) fell 0.2%. Labor market conditions remain unchanged. Weekly initial jobless claims of 206K were basically inline with consensus (205K) and last week (207K). Continuing claims of 1774K were also roughly in line (1780K). Existing Home Sales come out after the open along with Wholesale Inventories, Crude and Natural gas inventories. A 30Y bond auction will also see a lot of attention, given the rate moves and coming after yesterday's very strong 10y auction. Ahead of tomorrow’s CPI report odds for a rate hike next week have moved up to ~75%. The USD is bouncing modestly.
Global markets were mostly lower overnight as oil prices kept traders on edge. The Nikkei bucked the weakness ending slightly higher with financials outperforming. There continued to be some hawkish central bank commentary ahead of next week’s rate decision. India’s Sensex also ended with modest gains. Markets in China/Hong Kong were under pressure. There have been some slightly positive trade headlines ahead of President Xi’s trip to the US. European indices are near session lows down between 0.5% - 1%. The ECB hiked rates by 25bps as expected.
Energy and ag commodities that are directly impacted by the global conflicts are moving higher. The metals complex is under pressure. Gold is breaking back below 4,400 down nearly 2%. Other precious metals are down closer to 5%. Copper is getting hit after reports that the administration may call off tariffs. Ag is modestly higher, there are reports that China purchased 1ml tons of soybeans. Crypto has accelerated to the downside amidst the risk off sentiment.
Earnings
After-Market: AVAV, AEO, NAVN, SKIL, WLTH
Pre-Market (Thrs): CAL, DBI, M, MCFT, TEN, VNCE
After-Market (Thrs): ADBE, CPRT, DSGX, ORCL, RH, ZUMZ
Economic Data:
US:
Yesterday US equities were under almost as much pressure as Drake Maye last night. The S&P 500 fell ~0.5% with broad based weakness leaving the equal weight version of the index down 1%. AI tech hardware outperformed again amidst positive management commentary at sell side conferences and as recent model releases continue to receive positive reviews, outside of the guy who is calling for the extinction of the human race. Oil prices extended to the upside with ICE Brent breaking back above $100. This along with some disappointment in the size of the announced Treasury buyback pushed yields higher, despite a reasonably strong 10yr auction.
S&P futures tried to bounce modestly overnight but have turned lower as oil prices have accelerated to the upside. Houthis have reportedly seized control of the port city of Mocha in the Bab el-Mandeb Strait sending ICE Brent it up >4% currently trading above $105. This morning’s PPI was largely in line with expectations but did accelerate from last month. This along with the move in oil is weighing on Treasuries with yields up >5bps across the curve. President Trump’s pledge to pay a $5k dividend if Republicans win mid-terms is not necessarily helping the cause. S&P futures have accelerated to the downside looking down ~0.5%, which would put the cash index right around its 50d ma.
Headline PPI was inline on a m.m basis (+0.4%) and last month was revised up from 0.0% to 0.1%. Core m.m of 0.2% was slightly below the 0.3% consensus, while core y.y was inline (+4.6%). Final demand goods rose 1.1% m/m but more than 75% of that was Energy. Ex-Energy and Food it was up 0.4%. Final Demand Services was up 0.1%, driven by transportation and warehouse services. Trade services, a volatile measure (i.e. margins) fell 0.2%. Labor market conditions remain unchanged. Weekly initial jobless claims of 206K were basically inline with consensus (205K) and last week (207K). Continuing claims of 1774K were also roughly in line (1780K). Existing Home Sales come out after the open along with Wholesale Inventories, Crude and Natural gas inventories. A 30Y bond auction will also see a lot of attention, given the rate moves and coming after yesterday's very strong 10y auction. Ahead of tomorrow’s CPI report odds for a rate hike next week have moved up to ~75%. The USD is bouncing modestly.
- US 2yr +7bps to 4.50%, 5yr +7bps to 4.69%, 10yr +6bps to 4.91%, 30yr +5bps to 5.35%
- USD index: +$0.27 to $99.08
Global markets were mostly lower overnight as oil prices kept traders on edge. The Nikkei bucked the weakness ending slightly higher with financials outperforming. There continued to be some hawkish central bank commentary ahead of next week’s rate decision. India’s Sensex also ended with modest gains. Markets in China/Hong Kong were under pressure. There have been some slightly positive trade headlines ahead of President Xi’s trip to the US. European indices are near session lows down between 0.5% - 1%. The ECB hiked rates by 25bps as expected.
Energy and ag commodities that are directly impacted by the global conflicts are moving higher. The metals complex is under pressure. Gold is breaking back below 4,400 down nearly 2%. Other precious metals are down closer to 5%. Copper is getting hit after reports that the administration may call off tariffs. Ag is modestly higher, there are reports that China purchased 1ml tons of soybeans. Crypto has accelerated to the downside amidst the risk off sentiment.
Earnings
After-Market: AVAV, AEO, NAVN, SKIL, WLTH
Pre-Market (Thrs): CAL, DBI, M, MCFT, TEN, VNCE
After-Market (Thrs): ADBE, CPRT, DSGX, ORCL, RH, ZUMZ
Economic Data:
US:
- Initial Claims: 206k vs. 205k cons., prior 206k
- Continuing Claims: 1.774 vs. 1.78ml cons., prior 1.779ml
- PPI: 0.4%/4.6%m.m/y.y vs. 0.4%/4.6% cons., prior 0%/4.2%
- Core PPI: 0.2%/4.6% m.m/y.y vs. 0.3%/4.6% cons., prior 0.2%/4.2%
- 10:00 Existing Home Sales
- 10:30 Oil Inventories
- 1:00 30yr Auction
- China Vehicle Sales: -5.1% prior -0.3%
- ECB Rate Decision: Hiked by 25bps to 2.65% as expected
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