The Fuse
It’s a big week for markets and the economy, futures are starting out modestly in the green. The Federal reserve meets this week for their 6th session of the year to discuss monetary policy. It is largely viewed the committee will cut rates 1/4 point and possibly map out a path for future cuts. Friday is a big options expiration day.
Interest Rates are bumping slightly higher this am, the 2 year yield about flat. This bond seems to believe the fed will be cutting more into 2026. 10 yr yields are slightly higher. High yield bonds are strong, yields are tight. Fed futures looking for three cuts in rates for the rest of 2025.
Markets are stepping up higher this morning with some strength in Europe. The STOXX rose up .2% led by better gains in France (up .4%), the FTSE was flat. US dollar index fell .1%, gold is down a bit while silver and crude oil are little changed. In Asia Hang Seng gain .1% but Shanghai down .2%, Japan was closed. Yields in German were down 1bp while US 10 yr treasuries up 1bp.
The earnings calendar is thin this week, with the biggest name being FedEx. We’ll also get a read on the consumer with Darden, Cracker Barrel and Dave/Buster’s. Housing will get a look with Lennar and Ferguson.
Markets were strong last week with good volume trends, which tells us the rally could continue a bit longer. This is often leads to higher prices, and if more new highs are achieved the bulls will clearly be in control. Big expiration coming so we might have some volatility to deal with.
Awful breadth on Friday with lower volume though so we’ll give the bull the benefit of the doubt. Oscillators are barely in the green so the tide continues to move bullish, new highs were trouncing new lows, that trend remains bullish.
Volume levels were lower this week but we expect to see more turnover in the coming days. A fed meeting is this week and we’ll also have options expiration on Friday, this is a big one where turnover is going to be large. We have not had much selling so far this month so be on guard for that.
Indices are not looking to test support levels just yet. However, if we do get a surge this week that might happen sooner rather than later. No question the trend is bullish but to keep it going there needs to be a bit of giveback at some point.
The Internals
What’s it mean?
Bearish day for the internals this and Friday, with weakness in the VOLD and ADD. Ticks were mostly red, that signaled heavy sell programs during the day. VIX shot up end of day, curiously. Perhaps the VIX down at 15% was too tempting to buy some protection. Put/calls remain calm and are staying down.
The Dynamite
Economic Data:
- Monday:Empire State manufacturing
- Tuesday:retail sales, biz inventories, industrial production, cap utilization, fed meeting starts, home builder confidence
- Wednesday:Housing starts, building permits, FOMC rate cut decision/Chair Powell press conference
- Thursday:Jobless claims, Philly Fed, leading economic indicators
- Friday:Mary Daly speaks
Earnings this week:
- Monday:PLAY
- Tuesday:FERG
- Wednesday:GIS, MANU, CBRL, BLSH, SANG
- Thursday:DRI, FDS, FDX, LEN, RSSS, SCHL
- Friday:
Fed Watch:
Fed meeting this week and the market is largely looking for a rate cut. That will likely happen, we’ll see projections for the next few months and into 2026 to see where they see growth and inflation coming in the year ahead.
Stocks to Watch
Options – Friday is a big expiration day, we’ll see heavy volume and some volatility.
Bitcoin – The crypto currency looks to have bottomed and is on the rise, this may lift other markets.
Bonds – Keep an eye on fixed income, if the fed follows through with a rate cut the bond market may give some information over what may be next.
