The Market Today
Holiday-Shortened Week Full of Economic Data with Concerns over Syria in the Background
by Craig Dismuke, Dudley Carter
Vining Sparks Economic Outlook Webinar (Tuesday): Vining Sparks will host its 2nd Quarter Economic Outlook Webinar on Tuesday, April 11, at 10:00 a.m. CT. During the 30-minute webinar, we will look at how the economy has evolved since our 1Q economic outlook. There remains meaningful uncertainty around fiscal and monetary policy. Through the first three months of the year, there is less optimism about fiscal policy and more certainty that the FOMC will be more hawkish than expected coming into the year. That combination has caused the markets to stall out and trade in a fairly narrow range.
Holiday-Shortened Week Full of Economic Data with Concerns over Syria in the Background: Despite the moderately heavy week for the U.S. economic data this week, the markets are likely to keep an eye on the global tensions developing around Syria for direction. Among the data released this week will be the small business optimism report (Tue), the JOLTs job openings and labor turnover report (Tue), import prices (Wed), producer prices and consumer confidence (Thu), and then Friday’s retail sales and CPI inflation reports. It is also a holiday-shortened week with a recommended early close for the bond market on Thursday and a full close on Friday in observance of Good Friday. It is a bit unusual to have such important economic reports as retail sales and CPI inflation released on a holiday, which could lead to some volatility next Monday if there are any surprises in the reports.
Overnight Activity – Markets Continued to Contemplate Last Week’s Data: Markets are sending divergent signals about risk preferences to start the week. After a heavy week of economic reports and geopolitical activity last week, markets have plenty of data points to continue absorbing. Japanese equities gained as yen strength subsided despite a stern response from North Korea to the U.S. response in Syria and reports American warships were en route to the Korean peninsula. Chinese equities floundered after a meeting of President Xi and President Trump last week produced mostly positive and constructive headlines but included little in the way of definitive steps forward. European equities are lower and sovereign yields there are signaling a slight risk-off bias with yields up on the peripheries. The first round of the French election is two weeks away and recent polls show the anti-Euro Le Pen tied for first. To be sure, she’s not expected to fare as well in the final round. U.S. equity futures are higher, Treasury yields are essentially flat with Friday, and the Dollar is marginally improved.
WSJ Says Bonds Flash Warning Signs (WSJ A1): “Investors are buying record volumes of new bonds, signaling that many remain skeptical about the prospects for faster economic growth and are reluctant to move on from a strategy that has worked for years. … Companies and governments in emerging markets sold $178.5 billion of dollar-denominated debt in the first three months of the year, the best first quarter on record, according to data provider Dealogic. U.S. companies with junk-bond ratings issued $79.6 billion, double from a year earlier.”