S&P 500 futures are looking to open 9 points higher following yesterday’s mixed session. Sentiment is up as Q3 earnings reports began yesterday, which saw Alcoa, PepsiCo and Marriott all beat Wall Street forecasts.
Meanwhile, the dollar is weaker, oil is up 1% to $70.25, gold is up at new fresh highs at $1054.71 per ounce, and commodities are 1%-4% stronger.
Key Events Today:
8:30 ― Initial Jobless Claims rose last week, halting a three-week streak of weekly declines. Economists believe the general trend is still downward, with the median forecast at 540k this week, compared to 551k in the week before. The weekly numbers continue to indicate major declines in payrolls, so it will take a huge surprise for markets to become optimistic on the labor front.
“The labor market remains the Achilles heel of the economic recovery, as evidenced by the September employment report ― which featured another significant decline in payrolls, a rise in the unemployment rate, and a decline in the private-sector workweek,” said John Ryding and Conrad DeQuadros, economists at RDQ.
10:00 ― Wholesale Trade has been in decline for 11 months as businesses adjust to the new economic reality. Economists expect the trend to continue in August, though with industrial production rising, business confidence has been ticking upwards and the inventory to sales ratio has been rising.
“The underlying trend in wholesale inventories in absolute terms in clearly downwards,” said HFE’s Ian Shepherdson, who said the data could change forecasts for the pace of GDP growth.
Inventories will continue to fall, he added, but “what matters for the headline GDP number is the change in real inventories from one quarter to the next. We have no doubt inventories will add to third quarter growth.”
10:00 ― Senate Banking Committee hearing on the “Future of the Mortgage Market and the Housing Enterprises.”
1:00 ― 30-Year Bonds ($12 billion)
2:00 ― House Financial Services subcommittee hearing on FHA Capital Reserves, Assumptions, Predictions and Implications for Homebuyers.
3:00 ― Federal Reserve releases latest data on its purchases of mortgage-backed securities.
7:00 pm ― Fed Chairman Ben Bernanke gives an update on the central bank’s balance sheet. Sal Guatieri from BMO said there is one issue analysts will be watching out for.
“The Fed’s assets have leveled off at just over $2 trillion in recent months, as ongoing purchases of agency MBS/debt and Treasury notes have been offset by waning interest in term auction credit,” he said. “The Fed believes the banking system has enough liquidity to sustain a recovery, as the recent downward trend in Treasury and mortgage rates would appear to attest. However, the money supply has stopped growing and even started contracting since June, possibly suggesting some downside risk to growth.”
8:45 ― Kansas City Fed President Thomas Hoenig speaks for the second time this week, to an economic forum sponsored by the Fed’s Oklahoma City branch.
1:00 ― 30-Year Bonds ($12 billion)
