E-mini S&P 500 (September): Settled at 4519.25, down 15.25
E-mini Nasdaq-100 (September): Settled at 15,674.75, up 23.25
U.S. benchmarks have rebounded to unchanged from a soft tape overnight. Europe opened lower with the DAX losing as much as 1.5% as traders eye tomorrow’s ECB meeting. Expectations are mounting for the central bank to reduce its quantitative easing program and yesterday’s better Q2 GDP revision gives credence to the move.
Hawkish committee members have made their voices heard in recent weeks, but it was former ECB President Jean-Claude Trichet who may have soothed risk assets early this morning. In a Bloomberg interview, the ex-head highlighted how the ECB’s program is flexible and different from the U.S. Federal Reserve’s commitment, therefore a move to reduce purchases (increased this year) is much less significant than its counterpart. The yield of the German 10-Year Bund has retreated from a near 2-month high.
The Bank of Canada announces a policy decision at 9:00 a.m. CT. They are no longer expected to announce a taper of their bond purchases due to uncertainties tied to the Covid-19 Delta variant, but also ahead of jobs data this Friday, and elections later this month.
In the U.S., we look to more news on the jobs front with JOLTs Job Openings for July due at 9:00 a.m. CT. Expectations are for the read to recede from June’s record of 10.07 million vacancies to 10.0 million.
The Treasury will auction $38 billion of 10-Year Notes at noon CT and $24 billion 30-Years tomorrow. The yield of the U.S. 10-Year also hit nearly a 2-month high yesterday. We then look to comments from NY Fed President John Williams at 12:10 p.m. CT.
Yesterday, Apple and Netflix each set fresh record highs and the overall tape was led by the FAANG stocks and Tesla, which have struggled to keep pace with Alphabet and Microsoft since July. Are buyers purposely reaching for what has underperformed in a grab for yield, or is this the start of fresh rotation?
The concentrated strength aided Communication Services +0.45%, Consumer Discretionary +0.36%, and Information Technology +0.03% in being the only sectors to cling to positive territory.
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